Will govt slap 19% duty hike on power equipment imports today?

New Delhi: The government is likely to take a decision on raising customs duty on imported power equipment today, as part of efforts to provide a cushion for domestic manufacturers which are battling intense competition, mainly from China.

The Cabinet Committee on Economic Affairs (CCEA), to be chaired by Prime Minister Manmohan Singh, is scheduled to discuss the issue relating to duty on overseas power equipment, sources said.

[caption id=“attachment_230029” align=“alignleft” width=“380” caption=“The proposal is to levy 5% customs duty, 10% countervailing duty and 4% special additional duty as against 10% customs duty and 4% CVD.”]  [/caption]

Even though, there has been no official word on the quantum of duty hike, speculations are rife that the government could slap up to 19 percent levy on imported power equipment. Private power producers, most of whom depend on overseas equipment, are voicing strong opposition saying that such a move would result in higher electricity tariffs apart from adversely impacting the sector.

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At present, equipment imported for projects of less than 1,000 MW capacity attract five percent customs duty, while those above that enjoy levy exemption. Proposal for higher duty is aimed at providing a cushion to domestic equipment makers such as BHEL and Larsen & Toubro against competition from overseas manufacturers.

The Power Ministry has already moved a Cabinet note which is believed to have proposed 19 per cent duty on imported equipment for large power projects.

In December last year, the Power Ministry circulated a draft Cabinet note proposing imposition of 14 percent duty on import of electricity equipment.

A panel headed by Planning Commission Member Arun Maira had suggested imposition of 10 percent customs duty and 4 percent special additional duty (SAD) on such imports.

Meanwhile, the Association of Power Producers has now written to the Prime Minister opposing proposed customs duty for imported power equipments.

The power producers have said that the domestic manufacturers are already burdened with a huge order book and the cost of financing imports is very competitive.

Agencies