India May Levy 19% Import Tax on Power Gear Including From China

India's cabinet is likely to approve a proposal to impose a 19 percent duty on imports of power generation equipment to help local manufacturers Bharat Heavy Electricals Ltd. (BHEL) and Larsen & Toubro Ltd. (LT) compete for orders with Chinese rivals, according to a government official.

"I have received feedback from the concerned ministries and am confident that the cabinet will approve our proposal sometime in the next two weeks," Power Secretary P. Uma Shankar said yesterday by telephone from New Delhi. "We have most of the key pieces in place this time around."

A panel headed by Planning Commission member Arun Maira recommended in 2010 a levy of 14 percent in import duties to "bridge the disadvantage" faced by local manufacturers against overseas rivals, especially from China. Chinese suppliers won 34 percent of new equipment orders for additional capacity that's planned in Asia's second-fastest growing major economy in the five years ending March 31, according to the Ministry of Power.

Bharat Heavy isn't asking for any special protection, Chairman B. Prasada Rao said in November after India's power equipment makers met Heavy Industries Minister Praful Patel seeking the 14 percent duty.

India imposes 5 percent duty on import of power generation equipment for projects with less than 1,000 megawatts capacity.

Bharat Heavy faces competition from Chinese equipment makers such as Shanghai Electric Group Co. and Dongfang Electric Corp., which want to tap into Prime Minister Manmohan Singh's $1 trillion infrastructure investment plan, including $400 billion for power.