Lens on power equipment imports

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New Delhi/Mumbai: The government has begun the legwork for restricting the surging Chinese power equipment imports and strengthening the market position of state-run equipment supplier Bhel.

The Planning Commission has set up a high-level committee headed by its member Arun Maira to assess the impact of power equipment imports from China and suggest action. The committee will include officials of the ministry of heavy industry.

The Centre’s move comes close on the heels of Union minister of heavy industries Vilasrao Deshmukh’s statement on Monday that his ministry does not want India to become a dumping ground for Chinese companies, though India’s power generation companies have reservation on the issue.

Theoretically, the government can invoke anti-dumping provisions or take safeguard action to check imports. While the anti-dumping authority would need to establish injury to the domestic industry before imposing duties, the Safeguards Directorate has more discretionary powers, as it merely needs a “sudden surge” in imports as grounds to take action.

“We are in the process of collecting the data to ascertain the impact of importing equipment from China and other countries. The committee under the Planning Commission is spearheading the exercise,” a top official in the ministry of heavy industry told FE.

“Bhel has been representing with the heavy industry ministry that it has a 10-15% price disadvantage against Chinese power equipment suppliers. The main contention is that duties on imported power equipment have been made zero in the mega power policy whereas domestic companies have to pay different taxes and duties. Bhel has demanded a level-playing field,” the official added. The PSU has demanded re-imposition of import duty on power equipment.

But this is not a prudent solution and could lead to higher tariff for electricity consumers, warns power sector analysts.

It could also derail the power ministry’s capacity addition targets.

The ministry has envisaged a capacity addition of 78,700 mw in the Eleventh Plan, a quarter of which is being implemented by Chinese contractors. The ministry has argued that curbs will work only when the domestic capacity for power equipment is adequate.