Protectionism seems to have regained favor within the halls of the Indian bureaucracy. Bowing to pressure from the industrial lobby, the union government is likely to soon rescind the duty benefits allowed to equipment imported for projects categorized under the Mega Power umbrella of the power ministry.These include the ambitious ultra mega power projects, the prospects of which now seem to have been ostentiably sacrificed to protect domestic manufacturers from competition from foreign vendors, especially the Chinese. The rationale put forward for this move by the government is that when the Mega Power Policy was first introduced, domestic capacity for the manufacture of such state of the art supercritical units was non-existent. The situation, it feels, has changed now.
Accordingly, a Committee of Secretaries (COS) was constituted, which, over its meeting held in mid-July 2010, has offered that a similar duty structure, as currently applicable on imports of power equipment for non-mega projects, should be made applicable to mega, as well as ultra-mega, power projects.
This means, a custom duty at the rate of 5%, countervailing duty (CVD) of 10% and special additional duty (SAD) of 4% will be levied on the supplies to the all categories of power projects.
With a view to avoid any disruption to the ongoing capacity addition programme, the ministries of power and heavy industries would formulate a suitable clause to provide exemption from import duty to the power projects.The modalities to implement this new regime for projects in the pipeline would also be finalized, in consultation with Department of Revenue (DoR).Notification of the policy is expected soon.
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