The Centre has disallowed import of capital goods for power generation and transmission projects under the Export Promotion Capital Goods (EPCG) scheme, in a move that may discourage imports from China and boost domestic manufacturing.
An official notification amending the Foreign Trade Policy 2015-20 was issued by the Directorate General of Foreign Trade (DGFT) on Monday stating that authorisation under the EPCG scheme shall not be issued for import of any capital goods for generation/transmission of power. The EPCG scheme allows import of capital goods at zero customs duty for pre-production, production and post-production subject to the specified export obligation.
“This development will make it more difficult for Chinese manufacturers to participate in the Indian thermal power sector. The share of Chinese equipment in Indian power plants has been anyway coming down because Indian competitors offered better quality products and better services,” a power industry official said.
Importers of capital goods for the power sector will now have to pay an import duty of 5 per cent.
Between 2011-12 and 2015-16, of a targeted 76,334 MW thermal power capacity addition, as much as 37,904 MW (or about 50 per cent) was to come from Chinese suppliers. However, most of these were for projects coming up between 2011-12 and 2013-14.
The Centre has fixed a capacity addition target of 88,537 MW of power generation for the 12th Plan period ending 2016-17. As of December 2015, 72,240.12 MW or 81.59 per cent of the target had been achieved, according to the Central Electricity Authority.