Power Min floats fresh proposal on equipment import duty

The Power Ministry has floated a fresh proposal for imposing higher duty on imported power gear and it is likely to be taken up by the Cabinet in the next two to three weeks.

The plan to slap higher duty on overseas equipment is aimed at providing a level-playing field for domestic manufacturers such as BHEL and Larsen & Toubro against cheap imports, especially from China.

Power Secretary P Uma Shankar today said the Ministry has moved the Cabinet note on imposing higher levy on imported power gear.

The proposal is expected to be taken up in 15-20 days, he told reporters here. However, he did not provide details on the quantum of levy that has been proposed.

Late last month, the Prime Minister's Office had directed the Power Ministry to prepare a fresh Cabinet note on the same.

Sources had said the Power Ministry was likely to suggest the quantum of overall levy on overseas gear at 19%, as proposed in the earlier Cabinet note. With the government raising the excise duty by 2% to 12% in the Budget, total levy would be 21%.
At present, equipment imported for projects of less than 1,000 MW capacity attract five% customs duty while those above enjoy exemption.

In May, the Cabinet had deferred the proposal to raise the duty on imported power gear.
The ministries of power and commerce had suggested 19% levy, while the Heavy Industry Ministry recommended a duty of 14%.

The three ministries had differences on the quantum of basic customs duty that can be slapped on overseas power gear. While the Power Ministry pitched for five% customs duty, Commerce and Heavy Industry Ministries sought 15% and 10%, respectively.

A panel headed by Planning Commission Member Arun Maira in its report had suggested imposition of 14% levy -- with a customs duty of 10%.

The Coordinating Committee of Secretaries (CCoS) had pitched for 19% levy on imported power gear including five% customs duty.