Economic Times reported that in a bid to help power equipment manufacturers like BHEL, India government relaxed norms for considering domestic supplies to mega power projects as exports, which would entitle them to duty benefits.
A Government notification said that in regard to mega power projects, the requirement of international competitive bidding would not be mandatory. However, domestic suppliers can avail of export benefits on supplies to mega power projects if these projects have been awarded through tariff based competitive bidding.
The move will allow domestic suppliers to avail of deemed exports benefits. Deemed exports refer to transactions in which goods do not leave the country but are considered as exports for giving sops like tax refunds to the suppliers.
Experts said that the move will benefit domestic firms like BHEL, L&T, Bharat Forge, etc. Of late, domestic manufacturers particularly, BHEL, have been facing tough competition from cheap Chinese suppliers. During the 11th Plan Period, out of the likely thermal power capacity addition of 61,237 MW equipments for about 21,000 MW are being imported from China.
Mr Anil Razdan former Union power secretary said that "It is an idea to give a push to domestic companies but some benchmark with international pricing should be there so that they do not resort to cartelization."
However, Power Ministry officials played down the changes saying even in the tariff based competitive bidding global companies can participate.
Source : Economic Times