Domestic power equipment manufacturers including BHEL and Larsen & Toubro will become competitive against their Chinese counterparts while supplying for big generation projects of 1,000-mw or above.
The government on Monday waived off 10 per cent manufacturing duty on supplies to expansion of mega power projects. Country’s largest power equipment manufacturerBharat Heavy Electricals Ltd (BHEL) hailed the move. A senior power ministry official said the move would lead to cheaper power equipment and reduction in tariffs.
“Capital goods imported for the expansion of existing mega or ultra mega power projects enjoy a concessional basic customs duty of 2.5 per cent and full exemption from CVD (counter veiling duty). This creates a disability for the domestic suppliers who are required to pay central excise duty on supplies to such projects. I propose to correct this anomaly by providing a parallel excise duty exemption,” finance minister Pranab Mukherjee said in his budget speech for 2011-12.
BHEL chairman and managing director BP Rao said this is a good move for Indian power equipment sector. “This is just for the expansion projects. There are no ultra mega power projects under expansion mode now. However, this will help us in case of supplies for expanding mega power projects. We have taken up some such projects in Maharashtra and Orissa,” he said.
Indian power equipment companies have been asking for imposition of a heavy 14 per cent duty on imports by project developers as cushion against cheaper foreign goods.
Mukherjee also extended the 10-year income tax holiday to power generation and transmission projects commissioned by March 31, 2012. The dispensation was available to projects commissioned before March 31 of this year.