Domestic power equipment manufacturers including Bharat Heavy Electricals Ltd (BHEL) and Larsen and Toubro (L&T) could be asked to initiate safeguards or anti-dumping action against Chinese gear coming into the country.
The move is part of a four-pronged strategy — including price preference for domestic manufactures, tariff measures in the form of a cumulative 14 per cent duty on imported equipment and stringent performance standards for imported equipment — that is being firmed up to counter surging Chinese equipment imports.
The imposition of Chinese-specific safeguard duties, on the basis of evidence of “assistance” by Chinese Government to its gear manufacturers citied by a high-level Planning Commission panel, is expected to be considered at a meeting called by the Heavy Industries Ministry on the issue later this week.
The issue comes at a time when equipment contracts for an estimated 37,626 MW of upcoming power capacity are estimated to have been placed with Chinese vendors. Currently, equipment imports attract zero levy under the Centre's Mega Power Policy for thermal projects of 1,000 MW and above.
The problems faced by domestic gear manufacturers vis-à-vis equipment imports has been flagged at the highest levels in the Government and the issue has been listed at least thrice to be taken up by the Union Cabinet in the past 12 months. A decision, however, has been deferred amid lobbying from user groups in favour of deploying Chinese gear in their projects.
Earlier, a panel headed by the Planning Commission Member, Mr Arun Maira, had proposed that a 14 per cent duty differential faced by domestic firms needed to be bridged for mega and ultra mega power projects. This was suggested through the levy of a 10 per cent Custom duty and 4 per cent Special Additional Duty (SAD). At a subsequent meeting of a Committee of Secretaries (CoS), the proposal for the levy was diluted in favour of 5 per cent Customs duty, 10 per cent countervailing duty and 4 per cent SAD on import of equipment for mega and ultra mega power projects.
Apart from the duty differential issue, the Central Electricity Authority had earlier come up with a report on quality concerns raised against Chinese equipment. Private sector players too had detailed some of the glitches they encountered when using the Chinese equipment; but they continued with imports citing faster delivery and lower upfront costs. The Power Ministry too, citing further slippages in an already whittled-down target for the current Plan, has been backing the Chinese equipment imports.