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B P Rao, Chairman and Managing Director, Bharat Heavy Electricals Ltd, reiterated at a press conference here on Friday his stand that the 14 per cent duty on imported power gear recommended by the Arun Maira committee does not offer adequate protection to the domestic manufacturers.
He said that the after adjusting for countervailing duty and other levies, the net protection works out to less than 5 per cent.
The issue of imposing a duty on foreign made power boilers and turbines and the components is a much debated one in India. The power producers want to be able to bring cheaper, funding-backed equipment from abroad - mainly China - but domestic manufacturers, such as BHEL, are in favour of a duty.
Rao said that there was as yet no clarity on many issues around the proposed import duty, such as whether it would be applied prospectively only or if those who had already entered into import agreements would be subject to the duty. He said questions such as “from when” and “for which projects” needed to be answered.
In recent years, Chinese manufacturers such as Dong Fang, Shanghai Electric and Harbin, have bagged orders for around 80,000 MW of equipment, from Indian groups like Adani, Reliance and Jindal.
“The performance of the Chinese equipment is there for everyone to see,” Rao told the press conference in Tiruchi, where BHEL has its boiler manufacturing facility. He said that many Indian power producers were regretting their decision to opt for Chinese equipment.
Asked if the depreciating rupee offered a natural protection against imports, Rao replied in the negative. He noted that even India-made products had import content. Besides, the high inflation in India counter-balanced any currency depreciation advantages, he said.
Huge order book
Rao said that despite problems facing the power sector, such as those related to land, coal supply and financing, BHEL was able to achieve good order booking in the first quarter (Rs 5,590 crore) and the order book, at the end of June, stood at Rs 1,32,900 crore.
He said that the Indian power sector would see fresh orders for about 15,000 MW in the current financial year. Rao had previously said that he expected fresh order booking for BHEL in 2012-13 at around Rs 60,000 crore.
Many analysts have found this to be optimistic. “We find management’s guidance optimistic and expect BHEL to achieve Rs 31,000 crore of order inflow during the year,” said a recent report of Angel Research.
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