Private coal power producers urge easing curbs on Chinese equipment

India's private coal power producers have urged the government to allow equipment imports from China, saying domestic resources are insufficient and costly, as the country seeks to expand its generation from coal, industry and government sources said.

In 2021, India's Ministry of Power mandated the use of homemade equipment under its "Make in India" initiative, which sought to bolster local manufacturing. The programme also came at a time when diplomatic tensions were high between China and India.

The Association of Power Producers, which represents private coal-based power developers, wrote to the Central Electricity Authority on June 3 seeking an exemption from the "Make in India" mandate, according to a letter reviewed by Reuters.

While the association did not name China in its letter, sources said buying coal power equipment from Beijing was the only option for Indian companies. They added that permission to import from China could cut project costs by nearly half from the present 130 million to 140 million Indian rupees ($1.46 million to $1.58 million) per megawatt.

The electricity authority is looking at the association's request, the sources said.

Neither the power ministry nor the electricity authority responded to requests for comment.

India has said it is planning to add 97 gigawatts (GW) of coal capacity by 2035. About 48 to 50 GW of the existing capacity already uses Chinese equipment, as those plants were built before 2021, the sources said.

"Domestic vendors are unable to offer timelines for completion of projects by 2030 at competitive prices," the Association of Power Producers said in its letter, noting that some local power equipment suppliers have not built new plants at specific capacities over the past decade.

The association said easing restrictions would help complete stalled projects, expand existing facilities and support new greenfield developments where Indian power equipment manufacturers lacked "proven designs."

About 22 GW of private coal projects, or nearly 10% of the current coal-fired capacity, are on hold or unlikely to start generating power due to financial stress, according to data from the power ministry.

The financial stress highlights how cheaper equipment imports could lower project costs and support private power producers that are looking to expand, the sources said.