State-owned BHEL today said the government decision to impose higher duty on imported power equipment will help improve the competitiveness of domestic manufacturers.
Private power producers said, however, the move will push up electricity tariffs on account of costly equipment.
The Cabinet approved 21 per cent duty on imports of power equipment, a move aimed at protecting domestic companies such as BHEL from cheap Chinese shipments.
"The move to impose higher import duty on power equipment is definitely good and in the right direction. It will help in improving the competitiveness of domestic manufacturers," said B P Rao, Chairman and Managing Director, BHEL.
According to him, the real benefit of imposing higher levy on overseas gear would be only about four per cent.
Out of the total 21 per cent levy, only five per cent would be customs duty.
Domestic companies have to import certain materials that are not available in the country. "Hence, the overall benefit from the move will be around four per cent," said Rao.
The Cabinet has decided to impose 5 per cent basic customs duty, 12 per cent counter-veiling duty and 4 per cent special additional duty on overseas power gear.
However, the Association of Power Producers -- a grouping of over 20 private companies -- said increased import duty would result in higher electricity tariffs.
"It will increase the cost of power. The government has only gone by the protection of domestic equipment makers. They have not really addressed the concerns of private power generation companies," said Ashok Khurana, Director General, Association of Power Producers (APP).