In response to government’s decision on impose of duty on import of generation (BTG) equipment for Mega Power Projects (MPPs) / UMPPs (1,000 MW and above), The Indian Electrical & Electronics Manufacturers’ Association (IEEMA)’s, India’s nodal agency representing the manufacturers of electrical, industrial electronics and allied equipments in India, response and opinion:
The Indian Electrical & Electronics Manufacturers’ Association (IEEMA) has called for immediate imposition of import duty on power equipment for mega and ultra-mega power projects over 1,000 MW. Mr. Ramesh Chandak, President, IEEMA stated “this issue of providing a level playing field for domestic manufacturers of electrical equipment vis-à-vis imported equipment has been debated and discussed for long at the highest levels of the government and action must now be taken immediately. There is equally a strong case for even increasing import duty on transmission & distribution (T&D) equipment and generation equipment for non-mega projects.”
According to IEEMA:
• The entire industry is in doldrums because of the sluggish growth in the power sector and the escalating imports of electrical equipment and is in danger of becoming commercially unviable.
• The industry is 10.56% of the manufacturing sector is terms of value and 1.5% of the GDP. It also provides direct and indirect employment to 1.5 million people and over 5 million across the entire value chain.
• The Indian electrical equipment industry, Rs. 1, 10,000 crores in 2010-11, comprises of two segments - generation equipment which constitute 24% of the industry, and T&D and allied equipment which constitute the rest 76%.
• T&D equipment manufacturers are working at only 65% of their production capacity. In the last few years, the domestic manufacturing capacity of generation equipment has being ramped up and currently stands at 20,000 MW per annum against a requirement of about 16-17,000 per annum. With 6-7 joint ventures coming up in India, the capacity will increase to 40,000 MW per annum by 2014-15. The power generation capacity addition target for the 12th Plan may also be scaled down to about 75,000 MW. As a result, even the generation equipment sector will soon be sitting on huge surplus capacity.
• During the last five years, India’s imports of electrical equipment imports have increased at a CAGR of 28.28% and were at USD 11 billion in 2010-11. Import duties on most products are quite low and are being further lowered under the various FTAs signed by India.
• Disproportionate reliance on imported power equipment, with uncertain quality and lifecycle, and with no domestic manufacturing facility to provide immediate spares, replacements, etc. especially for heavy equipment, is fraught with long term risks.
• There is uncertainty in the power generation sector due to unavailability of fuel / lack of coal linkages for new projects, land acquisition issues, delays in environmental and other clearances, etc., which is impacting the downstream T&D sector. All this is directly impacting the domestic electrical equipment industry as demand is not picking up.
• Assured availability of quality power at competitive rate is a sine qua non for industrial and economic development of India. For an efficient and developed power sector in a country of India’s size, a strong domestic electrical equipment manufacturing base is essential and also strategic.
• T&D equipment is not covered.
• It is only for import of generation (BTG) equipment for Mega Power Projects (MPPs) / UMPPs (1,000 MW and above), where the current customs duty is nil.
• Imports duty already exists on T&D equipment and also BTG equipment for non-MPPs/UMPPS. It ranges from 5% to 10% basic customs duty, CVD 12% and SAD 4%, coming to a total duty ranging from 22.85% to 28.85%.
IEEMA is a 63 year old apex industry association representing the Indian electrical, industrial electronics and allied equipment industry. IEEMA has over 750 Members with a combined annual turnover of over USD 25billion. IEEMA is consulted for policy formulation as the industry-government interface, and evolves product standards alongside India’s standards setting body the BIS.
News published on 25 / 06 / 2012 by Bharat Vasandani