Cabinet slaps 21% duty on import of power equipment

[agentperry]

Quality is not the problem. Real issue is capability of domestic players to deliver according numbers in time. Can not really afford delays in powerplant setup due to slow supply. However I see public & private corporations lobbying together to implement these heavy duties on chinese equipment.

btw where are we-want-to-save-domestic-industry crybabies now? They should be furiously backing this step, but............ anyways

actually industry can deliver more but where do you want to place them? on tribals' land? you dare do that... after finalization and 99% completion of project people wake up to the reality that they can not live where they used to live, the land is now used for development of national infrastructure which god forbids is a blasphemous for them. on forest land- environmentalist will cry and choke the nation for death of innocent and cute rodents which are more than 1 million i number per square km in India.
where can you actually put a power station.

i think the rate of production of power equipment is higher than the rate of installation due to inactive govt. and not to forget assholes.

 

[nrj]

Lets hope new Land Acquisition Policy will clear these problems.

Actually most of the times there is unnecessary politics involved in setting up manufacturing units or power plants. Larger the delay, larger are the political gains for these stakeholders.

Face it. People in most of the areas vote for caste supremacy or a red colored note with sari for wife. When development will become electoral agenda, things should ease. Also its very essential to clear the implementation methods with giving absolute authority to either state or centre or a empowered federal body carrying speedy judicial resolution to concerned issues.

 

[Bangalorean]

^^ When our delightful "opposition" and sundry other vested interests managed to scuttle FDI in retail, I am very very skeptical that these people will ever be able to push the new land acquisition policy through.

 

[agentperry]

Lets hope new Land Acquisition Policy will clear these problems.

Actually most of the times there is unnecessary politics involved in setting up manufacturing units or power plants. Larger the delay, larger are the political gains for these stakeholders.

Face it. People in most of the areas vote for caste supremacy or a red colored note with sari for wife. When development will become electoral agenda, things should ease. Also its very essential to clear the implementation methods with giving absolute authority to either state or centre or a empowered federal body carrying speedy judicial resolution to concerned issues.

dude this thing cant happen in super-populous country like India, this country needs to be built from rubble and not the present state because present state is so rigid to be moulded again.
but for developing this country from rubble, there should be a rubble

 

[nrj]

^^ When our delightful "opposition" and sundry other vested interests managed to scuttle FDI in retail, I am very very skeptical that these people will ever be able to push the new land acquisition policy through.

Implementing Land Acquisition Policy will be Achilles heel for any Govt. Our establishment is not development orientated, rather it believes in political scores. Pension & Insurance reforms have similar hurdles ahead

However what surprises me is why those anti-FDI save-domestic-industry crybabies are not taking streets to support this Power Min move? Why this double standard? Says everything about their narrow-minded motives.

 

[Ray]

India is a complex country with complex problems.

One cannot rush into western concepts and practices with careful consideration.

 

[Tshering22]

This is the most idiotic decision ever. But I don't expect anything out of brain-dead and corrupt politicians who would use this also as an excuse to milking money out of the nation's growth for their own wealth.

Instead, if the GOI could have the self-respect to lay down the infrastructure to match China's power equipment manufacturing, that would have been a real productive initiative.

 

[charlyondfi]

dude this thing cant happen in super-populous country like India, this country needs to be built from rubble and not the present state because present state is so rigid to be moulded again.
but for developing this country from rubble, there should be a rubble

Implementing Land Acquisition Policy will be Achilles heel for any Govt. Our establishment is not development orientated, rather it believes in political scores. Pension & Insurance reforms have similar hurdles ahead
However what surprises me is why those anti-FDI save-domestic-industry crybabies are not taking streets to support this Power Min move? Why this double standard? Says everything about their narrow-minded motives.

Guys -- back to my point: following the money and who exactly will be beneficiary or looser in this anti-dumping measure -- if all you put is true, then this "anti-dumping measure" talk & posture is pointless, right? Since you don't have land to install all those power generators, then what does it matters where you got those generators from.
Sounds more question mark to me -- really puzzled:

 

[nrj]

Guys -- back to my point: following the money and who exactly will be beneficiary or looser in this anti-dumping measure -- if all you put is true, then this "anti-dumping measure" talk & posture is pointless, right? Since you don't have land to install all those power generators, then what does it matters where you got those generators from.
Sounds more question mark to me -- really puzzled:

Domestic power equipment manufacturers will benefit from this move.

There are roadblocks in acquisition of land, which doesnt really mean they'll be there forever. Also not every plant is suffering due to land acquisition.

 

[SpArK]

I hope this gets extended to electronics sector , especially the telecom.

Reliance and TATA's were providing cheap land phones to get profit and for orders and i personally know many models (Hueiwei) getting replaced in bulk orders after a week of installation due to faults.

 

[no smoking]

actually industry can deliver more but where do you want to place them? on tribals' land?

Where do you get the idea that indian companies can delivery more?
Check the following out:

http://www.reliableplant.com/Read/16873/india-to-buy-$7b-of-power-plant-equipment-from-china

India Plans to Impose 14% Tariff on Imported Power Equipment


The truth is Indian has not enough capacity to meet its demand. That is why chinese companies come in.

 

[charlyondfi]

Domestic power equipment manufacturers will benefit from this move.
There are roadblocks in acquisition of land, which doesnt really mean they'll be there forever. Also not every plant is suffering due to land acquisition.

Dear NRJ: tks, yes, I can surely understand that domestic manufacturers will benefit from. And perhaps other alternative exporters (Eukrane?) Nevertheless, who might loose from this? The power user/consumers?

 

[nrj]

Dear NRJ: tks, yes, I can surely understand that domestic manufacturers will benefit from. And perhaps other alternative importing countries (Eukrane?) Nevertheless, who might loose from this? The power user/consumers?

End consumers are least bothered about origin of power equipment used in a distant power plant.

There is no alternate country as of this moment because this will be uniform import duty unless Govt is ready to draft special exemptions for said country.

Domestic manufacturer may feel relived but as time will pass they'll loose margins due to internal competition.

 

[charlyondfi]

End consumers are least bothered about origin of power equipment used in a distant power plant.
There is no alternate country as of this moment because this will be uniform import duty unless Govt is ready to draft special exemptions for said country.
Domestic manufacturer may feel relived but as time will pass they'll loose margins due to internal competition.

Sorry, nrj, but you will have to tell me:
1) the price offered by domestic manufacturer can be as cheap as imported Chinese products, which tend NOT to be the case otherwise there will be NO such anti-dumping measure, or
2) the power supplier who need to buy these generators will NOT shift this higher equipment procurement cost to consumers -- either equipment cost is trivial, compared to such as land acquisition, or they will totally absorb it. The argument you indicated lower margin in the long run (higher in short) actually hint they will shift this cost to consumers...

Otherwise, I do NOT buy in that "consumers least bothered". Forgive my obsessed doubt toward cheap slogans such as "protecting domestic manufacturers" is always at the price of most those silent consumers...

 

[nrj]

Sorry, nrj, but you will have to tell me:
1) the price offered by domestic manufacturer can be as cheap as imported Chinese products, which tend NOT to be the case otherwise there will be NO such anti-dumping measure, or

Yes that is true. Hence the Govt move.

2) the power supplier who need to buy these generators will NOT shift this higher equipment procurement cost to consumers -- either equipment cost is trivial, compared to such as land acquisition, or they will totally absorb it. The argument you indicated lower margin in the long run (higher in short) actually hint they will shift this cost to consumers...

Not supplier but generator. Eventual distributors can/can-not be different.

There will be huge uproar if electricity prices shoot up specifically due to such measures. And in most likely case govt will rollback its proposal. Here Govt is under pressure to permit free electricity to farmers. If public sector units increase their prices to end-consumers, it will give natural advantage to private operators & they'll face less hurdles in expansion compared to today.

Otherwise, I do NOT buy in that "consumers least bothered". Forgive my obsessed doubt toward cheap slogans such as "protecting domestic manufacturers" is always at the price of most those silent consumers...

I meant end-consumers are least bothered regarding origin of power equipment. Its obvious that they'll be concerned if electricity cost go up.

End consumer is just ordinary man. Industries/factories consume much more electricity than urban middle class. And maybe they should bear increased prices if they must, to limit (not stop) flood of cheap foreign equipment.

And this is no one-sided argument. Most of the things depend on how domestic power equipment manufacturers react afterwards.

 

[charlyondfi]

I meant end-consumers are least bothered regarding origin of power equipment. Its obvious that they'll be concerned if electricity cost go up.
End consumer is just ordinary man. Industries/factories consume much more electricity than urban middle class. And maybe they should bear increased prices if they must, to limit (not stop) flood of cheap foreign equipment.
And this is no one-sided argument. Most of the things depend on how domestic power equipment manufacturers react afterwards.

Point taken, so in the end, industries/factories will be the ones taking cost -- not that sure they are that patriotic to see their margin goes down just because "...to limit (not stop) flood of cheap foreign equipment". At least in the short run -- "...how domestic power equipment manufacturers react afterwards". Nevertheless, I got your point & agreed.

Every policy got pro and con, favor and against. Thanks.

 

[nrj]

Electric gear import for power projects may attract 19% duty

The government is likely to announce a 19% duty on imports of electric equipment for all categories of power projects in the forthcoming Budget. The duty structure is likely to be made applicable from April 1.

According to a Cabinet note, a copy of which is available with HT, a 5% customs duty along with a 10% countervailing duty equal to excise duty on domestic industry and a special additional duty of 4% is likely to be levied uniformly on equipments supplies for power projects.
All projects certified as mega power project and provisional mega before the date of Cabinet decision will be exempted from the proposed duty structure and will continue to get the benefits of duty exemption available under the mega power policy, the note states. The list of projects will be submitted to the revenue department by the power ministry once the proposal is cleared by the Cabinet.

At present, projects with less than 1,000 MW of generation capacity attract a 5% import duty while the rest enjoy duty-free import of equipment. The proposed duty will help safeguard the interest of domestic equipment makers such as BHEL and Larsen & Toubro (L&T) against cheap supply of equipment by Chinese manufacturers.

Around 42,000 MW of capacity has already been added in the 11th Plan and 76,000 MW are under construction for benefit in the 12th Plan. Around 59,580 MW (about 48%) of orders out of the total 122,965 MW have been placed with BHEL. Share of orders placed on Chinese manufacturers have been 48,090 MW (about 39%) and 7,960 MW (about 6.5%) on other foreign manufacturers.

Besides BHEL, other domestic manufacturers have only 7,335 MW (about 5.6%) share out of 76150 MW of orders placed so far.

The proposed duty structure, is followed by most countries globally.

Electric gear import for power projects may attract 19% duty - Hindustan Times

 

[nrj]

 

[nrj]

Higher import duty will hurt sector: Private power companies like Reliance Power, Tata Power to PM Manmohan Singh

NEW DELHI: Private power producers, including Reliance and Tata Power, have written to Prime Minister Manmohan Singh saying that imposition of higher duty on imported equipment would result in increased electricity tariffs and would hurt the sector.

The letter to the Prime Minister comes amid government reportedly planning to slap higher import duty on power gear.

The plan for higher import levy is aimed at providing a cushion for domestic equipment makers such as BHEL and Larsen &Toubro that are grappling with stiff competition, especially from Chinese entities.

According to the Association of Power Producers (APP), there are some reports suggesting the government is moving ahead with the imposition of customs duty on imports of equipment for power projects.

"We sincerely believe that any step at this stage which increases the cost of power for consumers and leads to delays in capacity addition, would be very detrimental to the sector," APP Director General Ashok Khurana said in the letter to the Prime Minister.

Currently, equipment imported for projects of less than 1,000 MW capacity attract five per cent customs duty while those above that enjoy levy exemption.

"We request your consideration of the issues and continue the duty benefits for power projects...," the letter, dated February 27, said.

APP is a grouping of about 22 companies, including Reliance Power, Tata Power, Lanco Infratech and Adani Power, that account for 95 per cent of total generation capacity in the private sector.

More than 50 per cent of coal-based power capacities are based on imported equipment in the current five-year Plan (2007-12) and the trend is likely to continue in the next Plan period (2012-17).

The letter noted that imported power gear comes on faster delivery schedules since domestic manufacturers are burdened with a huge order book.

"BHEL's order book is 3.7 times its turnover while it is 7.1 times for L&T. This puts a severe constraint on ability of domestic players to supply within a given period," it added.

Further, imports of equipment are supported by export credit agencies, resulting in competitive cost of financing, APP pointed out.

"There has been a significant depreciation of the rupee against both the US dollar and the Chinese yuan ... there has been an implicit duty of 15-17 per cent on equipment and machinery imports," the letter said.

The domestic power sector is grappling with multiple woes including fuel scarcity, rising coal prices and environmental hurdles.

Higher import duty will hurt sector: Private power companies like Reliance Power, Tata Power to PM Manmohan Singh - The Economic Times

 

[nrj]

Power producers fear 50 paise/unit tariff hike

NEW DELHI, FEB. 28: Power tariffs may go up by Rs 0.50 a unit if the Government decides to impose special duty on imported equipment, say private power producers.

Opposing the move, they have written to the Prime Minister and other senior Ministers, under the aegis of the Association of Power Producers, saying this will not only result in increased tariffs but will also delay capacity addition.

The Government proposes to levy Customs duty on import of power equipment with more than 1,000 megawatt capacity. There is speculation that the Cabinet Committee on Economic Affairs will consider the proposal this week.

GENERATION COSTLIER

"Given the high import duty of over 20 per cent, and with rupee depreciation against all major currencies, the power tariff from all generation projects will go up by 30-35 paise a unit. At the consumer level, this will translate into an increase in prices by over 50 paise a unit," they argue.

Though the Finance Ministry has favoured a 19 per cent duty (basic Customs duty of 5 per cent, countervailing duty of 10 per cent and special import duty of 4 per cent), the Commerce Ministry has sought 24 per cent (basic Customs duty of 15 per cent, countervailing duty of 5 per cent and special import duty of 4 per cent).

Even if the Finance Ministry's argument is considered, the effective rate of duty would be 20.94 per cent, cess included.

NO LEVEL FIELD

At present, power generation equipment for projects below 1,000 MW bears a duty of 5 per cent while there is nil duty on equipment for projects over 1,000 MW. The Arun Maira Committee had favoured a duty of 14 per cent, while a Committee of Secretaries recommended 19 per cent for larger projects.

The duty hike is being considered to help domestic equipment manufacturers. But the power producers say that domestic manufacturers are already burdened with a huge order-book, putting a severe constraint on their ability to supply within a given period.

The power producers say that projects in all the other process industries — refineries, fertilisers, oil and gas pipelines — while being subject to similar import duties on their end products, can recover a major portion of the duty through CENVAT. Hence, the effective import duty for these industries is only 5.47 per cent, while for power producers, it would go up to 20.94 per cent.

Business Line : Industry & Economy / Economy : Power producers fear 50 paise/unit tariff hike