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Home arrow News arrow Power and Energy arrow ASSOCHAM wants Import Tariff Barriers on Chinese power equipment
ASSOCHAM wants Import Tariff Barriers on Chinese power equipment Print E-mail
Written by Anand   
Wednesday, 29 July 2009
New Delhi: Associated Chambers of Commerce and Industry of India (ASSOCHAM) has sought urgent imposition of tariff barriers since Indian power equipment manufacturers are loosing thriving business opportunities and jobs vis-a-vis their heavily incentivised counterpart from China.

The Chamber in a note submitted to the Finance Ministry has stated that as a result, domestic power equipment manufacturers’ in the last one year have lost business opportunities to supply such equipment to  mega power producers in India to an extent of 50,000 MW of capacity.

This has happened since domestic mega power producers’ have sourced supplies of power equipment from China worth Rs.2,50,000 crore  as they found imports of such equipment much cheaper due to the fact that China has incentivised its exports by completely exempting them from internal duties, feels the ASSOCHAM.

The Chamber spokesman said, "Chinese government provides incentives and rebates of 14% to it’s power plant manufacturers for exports and at the same time when such power equipment is imported into India, it does not suffer from customs duty or countervailing duty (CVD) and special CVD etc."

“On the other hand, Indian manufactured equipment, even when given ‘deemed export’ status for supply to specified projects, suffers duties and taxes to an extent of nearly 6% of the equipment cost”, further pointed out ASSOCHAM.

Therefore, exports benefits offered to Chinese manufacturers by their government, compounded by taxation on Indian manufacturers for domestic supply has resulted in an unfairly competitive advantage of Chinese manufacturers in the Indian market.

“The result is that power plant equipment corresponding to around 50,000 MW capacity has been ordered by Indian Power Producer on Chinese suppliers, resulting in a huge loss opportunity for the Indian industry.  In terms of value, for creation of 50,000 MW of capacity, domestic power producers have lost worth Rs.2,50,000 crore of business opportunity, assuming that 1 MW capacity of power plant is set up at a cost of  Rs.5 crore”, pointed out the ASSOCHAM.

The only way out left to restrict Chinese imports of power equipment to India is through imposition of tariff and non tariff barriers by Indian governments since it does incentivise the domestic power plant manufacturers in terms of reduced excise, sales tax, central sales tax and other local levies, pointed out ASSOCHAM. Just as China also incentivises its power equipment manufacturers through export subsidiaries, in India such facilities are not available and that is why its capital goods industry is suffering heavily.  The Finance Ministry should therefore subject Chinese exports to India, especially of capital goods such as power equipment should be subjected to heavy tariffs and non-tariff barriers as elaborated above.

The ASSOCHAM representation also points out saying that it is alarming that while so much has been, and is being imported, the tariff and non-tariff barriers imposed by the Chinese government, estimated to amount to over 50% of equipment cost, have made it impossible for Indian manufacturers to export power equipment to China.

According to the ASSOCHAM, in 2008 electrical machinery worth US$ 8.3 billion has been imported from China, while export of electrical machinery from India to China has been negligible.  The ASSOCHAM, therefore, has sought the intervention of the Finance Minister so that unrestricted exports of Chinese goods is discouraged from China to India and the domestic industry is saved from closing its shops especially for manufacturing of capital goods including power equipment and mega power plant.

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