India Ministry Moves Cabinet Note for 19% Import Duty on Power Equipment

The Power Ministry of India has moved a Cabinet note which is believed to have proposed imposition of 19 per cent duty on imports of electricity equipment for large power projects.

"We received comments from all the concerned ministries based on that we have sent a note to the Cabinet, now it can be taken up any time soon," Power Secretary, Mr P. Uma Shankar, told PTI, but did not divulge the percentage of duty to be levied on equipment imports for projects of more than 1,000 MW capacity.

However, sources said that the concerned note is likely to approve up to 19 per cent import duty on power gear, in a bid to safeguard the interest of domestic equipment makers like BHEL and Larsen & Toubro (L&T).

In December last year, the Power Ministry circulated a draft Cabinet note proposing imposition of 14 per cent duty on imports of electricity equipment. BHEL and L&T have been demanding an import duty on power equipment as they are facing stiff competition from the Chinese firms.

A committee headed by the Planning Commission Member, Mr Arun Maira, had suggested imposition of 10 per cent Customs duty and 4 per cent Special Additional Duty (SAD). At present, projects with less than 1,000-MW generation capacity attract 5 per cent import duty while the rest enjoy duty-free import of equipment.

Meanwhile, private power producers have opposed the imposition of duty stating that this would lead to increase in electricity tariffs.