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Buzz of increase in import duty on power equipment powers Bhel, L&T

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Meanwhile, the Sensex was up 81.31 points, or 0.51% to 16,083.82.

Bharat Heavy Electricals () had underperformed the market over the past one month till 13 December 2011, falling 19.35% compared with the Sensex's 6.92% decline. The scrip had also underperformed the market in past one quarter, declining 23.26% as against 2.82% fall in the Sensex.

L&T had underperformed the market over the past one month till 13 December 2011, falling 11.95% compared with the Sensex's 6.92% decline. The scrip had also underperformed the market in past one quarter, declining 28.31% as against 2.82% fall in the Sensex.

As per reports, the power ministry is seeking a 14% tax on imported power-generation equipment, in line with the demand of local manufacturers to help them compete with suppliers from countries including China. There is currently a 5% tax on imported equipment for most power projects. Imports for large plants--such as coal-based units of 1,000 megawatts and more--and projects located in certain regions are tax free. Local power-gear manufacturers such as Bhel and L&T have been seeking to raise the import tax so that their products can compete with cheaper imports.

Chinese power-equipment manufacturers have already received several orders from Indian project developers as local capacity is inadequate and products are comparatively more expensive. , for instance, last year signed a $10 billion agreement with Shanghai Electric Group Co. to buy power-generation equipment and related services for its various projects.

A committee of the , the government's top think tank, last year recommended a 14% tax on imported power equipment to protect local manufacturers and give them a level-playing field.

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