FinMin to discuss power gear duty on Feb 6

Amid a raging debate on cheap import of power plant equipments, the Finance Ministry has convened a meeting of secretaries of concerned departments on February 6 to discuss changes in the present duty structure.

Department of Economic Affairs (DEA) secretary R Gopalan is expected to chair the meeting, which would also be attended by secretaries of Power, Department of Heavy Industries and Department of Revenue, sources said.

With many private sector players such as Reliance Power and Adani Power importing cheaper equipments at negligible or zero duty, especially from China, the domestic manufacturers like BHEL and L&T have been crying foul.

The Power Ministry has sought 14% import duty on the imported gear, while the Heavy Industries Ministry has thrown its weight behind the domestic players.

However, the move to impose duty on imported equipments has been vigorously opposed by the private power companies.

At present, projects with less than 1,000 MW of generation capacity have to pay 5% duty on equipment imports, while those above this limit enjoy duty-free imports.

In a recent letter to Finance Minister Pranab Mukherjee, the Association of Power Producers (APP) said there "does not appear to be any merit in increasing custom duties at this stage".

"Any step at this stage which increase the cost of power generation and leads to delays in capacity addition would be very detrimental to the (power) sector," APP had said.

APP is a grouping of about 21 power companies, that account for over 95% of private sector capacity.

Last week, Minister of State for Power KC Venugopal had said the government would take the right decision after examining the issue of import duty on power equipment.

On January 18, top executives of private power companies held a meeting with Prime Minister Manmohan Singh, who assured them to address their grievances in a time-bound manner.