Government will exempt power companies that have already placed orders for power equipment from foreign suppliers from payment of enhanced 21 per cent duty.
Capacities worth 44,300 mw to be implemented through Chinese equipment will be eligible for zero duty import by Indian power companies.
This follows the union cabinet decision that imposed 21 per cent duty on import of power equipment to ensure level playing field for domestic suppliers like BHEL, Larsen & Tourbo and Jindals.
Out of the 167,900 mw worth power projects to be set up in twelfth plan, duty concessions would be applicable to 44,300 mw power equipment contracted with China.
“All mega power projects coming up in twelfth five-year plan that have been granted final or provisional mega certificates and where procurement orders have been placed or finalised will continue to get exemption and will continue to enjoy benefits under the earlier mega power projects policy,” commerce minister Anand Sharma said.
Sharma’s statement came after the ninth session of joint economic group meeting he held with his Chinese counterpart Chen Deming.
On July 19, the union cabinet approved five per cent basic customs duty, 12 per cent counter-veiling duty and four per cent special additional duty on import of power gear.
Power equipment imported for projects of less than 1,000 mw capacities already attracted five per cent customs duty while those above 1000 mw were totally exempt from duty hitting domestic power equipment manufacturers who had been demanding a level-playing field.
This shift in policy came after planning commission recommended that there was a need to address issues of domestic manufacturers, mainly BHEL and L&T, who are finding it tough to compete with power equipment manufacturers in China owing to high duty as well as high interest rates in India.
The two countries, on Monday, decided to set up a joint working group to address all trade issues in the wake of ballooning trade deficit India totaled up with China besides agreeing to work on a five-year plan for furthering economic co-operation.
“Issues pertaining to trade data and methodology should be looked into at the earliest and we have decided to set up a joint working group, comprising of senior officials of two countries to give its recommendations and assessments in three months time,” Sharma said.
As per Anand Sharma, China has proposed a five-year plan on economic cooperation and India will endorse it. “We have identified the focal points, the nodal authorities that will be working together to put this development plan on India-China economic cooperation,” he added.
India and China have set a target of $ 100 billion bilateral trade in three years against over $75 billion now. As per provisional data, India has a trade deficit of $ 39.65 billion with China in 2011-12. India’s exports to China stood at $ 17.90 billion while it imported $57.55 billion worth goods from Beijing.
At the two-hour long meeting between the Sino-Indian commerce ministers the issues that figured prominently include limited market access for Indian companies in China in IT, pharmaceutical and agricultural products. China, on its part, raised issues pertaining to visas and recent import duty hike on power equipment by India.
This is not the first time that India had raised the issue of widening trade deficit with China. Earlier, in March this year Indian commerce ministry officials presented a list of 916 items, including pharmaceuticals, diamonds, sea-food, agricultural products like rice and bovine meet, textiles and light engineering goods to China to boost exports but there has been no progress on that front and China continues to impose various non-tariff barriers to restrict imports from India.
Meanwhile, Federation of Indian Chambers of Commerce and Industry (FICCI) and China Chamber of Commerce for Import & Export of Machinery & Electronic Products (CCCME) on Monday signed a cooperation agreement to facilitate and boost cooperation between industrial and export entities between the two countries.
Besides nine memorandums of understanding (MoU) entailing import intention worth $189 million from India were initialed at the India-China entrepreneurs dialogue held jointly by FICCI and CCCME.
Source : mydigitalfc.com