IPA Newspack
  • Home
  • now
  • politics
  • business
  • markets

IPA /

IPA Special

IPA Special

Customs Duty On Power Equipment Put On Hold

NEW DELHI: The government has put on hold its plan to levy duty on import of power equipment by all developers to protect the interest of domestic firms, such as BHEL and L&T.
A note proposing a 5% customs duty on electrical equipment imported by mega power projects was moved by the power ministry in February, but it has since failed to get approval of the Cabinet due to inter-ministerial differences and strong opposition from power sector companies.
Meanwhile, the depreciation of rupee has also added to the cost of imports, thereby negating the need to levy 5% basic customs duty.
“The final note proposing the duty has been withdrawn for making a few changes, but it is likely to be kept in abeyance for the time-being,” said a top government source involved in the preparation of the note.
A power ministry official said the proposal would only be pushed when there is a general consensus between the commerce ministry, heavy industry ministry, power ministry, finance ministry and the Planning Commission.
Currently, the duty is there only for non-mega projects.
The delay on its proposal for the power sector, however, is being seen as blessing in disguise. The government had proposed to levy an import duty on imported equipment for mega power projects to help to the crisis-ridden domestic power equipment manufacturing industry. The decision to have an import duty was taken to take away the incentive available to a large number of power generators to source cheap equipment from overseas markets, particularly China.
Sources say as per the power ministry’s proposal, sent to the Cabinet Committee on Economic Affairs for approval, imported power equipment for all power projects will attract 5% basic customs duty, 12% countervailing duty (after the excise hike announced in the budget to 12%) and 4% special additional duty. Cumulatively, this works out to close to 23%.
Of this, the CVD is equivalent to the excise duty for domestic producers (which Bhel and L&T will have to pay) and SAD is in lieu of state VAT. The basic customs duty alone will act as an import tariff.
“The proposal to levy duty on power equipment is completely irrational and defeats the goal of providing cheap power to consumers. National interest should not be compromised to favour a couple of power sector companies operating in the domestic market,” said Association of Power Producers’ director general Ashok Khurana.
He added that imported equipment were not only cheap, but were also coming with cheaper funding by banks in the exporting country and were being delivered quickly, allowing power projects to commission projects on time. Against a delivery time of 48-50 months required by domestic equipment maker such as BHEL, Chinese equipment were being delivered in 37-38 months.
The government has bought this argument and wants to delay the decision on the levy. This is also seen from the recent statements of ministers. Recently, heavy industry minister Praful Patel had said that he was not sure when the duty would be imposed. The commerce department has also given similar statements about the fate of the proposal, while the power ministry, which was earlier not keen on the levy, is not sure when it could be imposed.
The concern is also that once the duty is imposed, the changes will dilute the government’s mega power policy, which offers benefits to thermal power projects of 1,000 MW and above and hydro projects of 500 MW and above by way of a tax holiday for 10 years and customs waiver on equipment imports. At present, a 5% duty is levied on equipment imported for power projects with capacities less than 1,000MW.
It is also understood that a large equipment capacity was being built in the country, which, with competition, could lead to price reduction of domestically produced equipment, negating the disincentive to generators who were importing equipment now.
Chinese equipment is said to be 25-40% cheaper than domestic variants, leading to the country supplying over 40% of total equipment ordered for 12th Plan projects.
The government had proposed the levy to counter the surge in imported equipment, particularly from China, which, after implementation, is expected to provide a level-playing field to domestic equipment manufacturers like Bhel and L&T, who together currently support 18,000 MW of capacity.

IPA Special

BJP Leaders Have Started Course For Overthrow Of Nitish Kumar Regime

August 17, 2022
IPA Special

Decoding My Seventy-Two Years In Independent India-Part Two

August 17, 2022
IPA Special

Reining In ‘Freebies’ Needs Thorough Debate

August 17, 2022
IPA Special

Release Of The Eleven Imprisoned Rapists Of Bilkis Bano Is Atrocious

August 17, 2022
IPA Special

Heyday For Geopolitics Of Eurasian Transport

August 17, 2022
IPA Special

Jagdeep Dhankar Had A Chequered Career Involving Many Political Parties

August 17, 2022
IPA Special

NATO Expansion Into Finland And Sweden A Danger To World Peace

August 17, 2022
Happening Now

DMK moves Supreme Court over ‘freebies’ term scope

August 17, 2022
Politics

R’sthan Cong Rs 20 lakh aid for slain Dalit boy’s family

August 17, 2022
Politics

Gehlot vs Pilot fight resumes ahead of polls next year

August 17, 2022
Happening Now

Azad quits J&K Cong panel within hours of appointment

August 17, 2022
Happening Now

Meira Kumar says ‘Chamar’ used as slur against her father

August 17, 2022
IPA Special

Prime Minister’s Five Pledges On Independence Day Mean Very Little To Poor

August 16, 2022
IPA Special

Labour Movement Has Lost Its Earlier Striking Power

August 16, 2022
IPA Special

Decoding My Seventy-Two Years In Independent India

August 16, 2022
IPA Special

Prime Minister Narendra Modi’s ‘Achhe Din’ Now Needs 25 Years More

August 16, 2022
IPA Special

Donald Trump Is On Dock Over FBI Seizures Of Classified Documents From His House

August 16, 2022
IPA Special

Bihar Developments Are Going To Have Impact In Uttar Pradesh In 2024 Polls

August 16, 2022
IPA Special

Amrit Mahotsava Has Been Turned Into A Big Jumla By Sangh Parivar

August 16, 2022
IPA Special

For Global Arms Dealers, Russian War In Ukraine Is A Big Bonanza

August 16, 2022

An appeal

The legacy of IPA, founded by Nikhil Chakravartty, the doyen of journalism in India, to keep the flag of independent media flying high, is facing the threat of extinction due to the effect of the Covid pandemic. Only an emergency funding can avert such an eventuality. We appeal to all those who believe in the freedom of expression to contribute to this noble cause.
Click here to learn more

Share

Reply

  • 0
More on IPA

BJP Leaders Have Started Course For Overthrow Of Nitish Kumar Regime

August 17, 2022 3:33 pm | IPA Staff

  By Arun Srivastava   It was certainly not a coincidence that on the day Prime   Minister was addressing the Independence   Day rally, Amit Shah...

IPA Special

Decoding My Seventy-Two Years In Independent India-Part Two

August 17, 2022 3:32 pm | IPA Staff

  By Nitya Chakraborty   In 1960, at the global level, the most important development was the World Conference of the   communist parties, the result...

IPA Special

Reining In ‘Freebies’ Needs Thorough Debate

August 17, 2022 3:30 pm | IPA Staff

By Dr. Gyan Pathak   The ongoing freebies case in the Supreme Court of India has reached an interesting stage with the DMK seeking to...

IPA Special

Release Of The Eleven Imprisoned Rapists Of Bilkis Bano Is Atrocious

August 17, 2022 3:30 pm | IPA Staff

By Sushil Kutty   Monday, the eleven   persons   who gang-raped Bilkis Bano during the 2002 Gujarat communal riots walked free. The panel that let them...

IPA Special

BJP Leaders Have Started Course For Overthrow Of Nitish Kumar Regime

in IPA Special
Aug 17, 2022   ·  

Decoding My Seventy-Two Years In Independent India-Part Two

in IPA Special
Aug 17, 2022   ·  

Reining In ‘Freebies’ Needs Thorough Debate

in IPA Special
Aug 17, 2022   ·  

Leave a Reply Cancel reply

You must be logged in to post a comment.

Follow us on
Up Next: Brent Crude Steady Under $119; Europe, Iran Eyed
©2020 -2021 India Press Agency, All Rights Reserved
Newspack by India Press Agency
Posting....
logo
  • Home
  • now
  • politics
  • business
  • markets