Power Ministry seeks curbs on used equipment imports

Amid concerns over a surge in imports of second-hand machinery, the Power Ministry has sought restrictions such as adherence to energy efficiency norms and guaranteed spare parts availability as prerequisites for such equipment coming into the country.

The matter was discussed at a recent Committee of Secretaries (CoS) and individual Ministries have been asked to inform the Directorate-General of Foreign Trade (DGFT) on the safeguards that they feel might be necessary in the event of a surge in imports in their sectors. Ministries in other affected sectors, including textiles and heavy industries, have also been asked to step up vigil, official sources told Business Line .

Domestic capital goods players, especially those in the SME (small and medium enterprises) segment across sectors such as textile machinery, power equipment, machine tools and earthmoving equipment could benefit if the Government proactively curbs imports.

In its view placed before the Secretaries' panel, the Power Ministry had suggested that imported equipment should be allowed into the country only if it meets the efficiency norms stipulated by the Bureau of Energy Efficiency. Besides, the Ministry has suggested pre-shipment inspection for used machinery by designated inspection agencies recognised by Indian authorities, prior to the equipment being loaded onto vessels for shipment to India.

Dynamic approach

Though there was a proposal in favour of bringing the matter before the Cabinet for imposing immediate restrictions on such imports, the Secretaries' panel decided against that for now and instead called for a dynamic approach of reviewing specific instances of any rise in imports. While the Department of Industrial Policy and Promotion has been pitching for a long-term policy on second-hand capital goods, the CoS did not favour it for now.

If imports consistently see a surge, the safeguards proposed by the Department of Industrial Policy and Promotion include a tariff barrier in terms of higher Customs duty on second-hand machinery imports than that applicable for import of new machinery in the same sector. Besides, restrictions on the age of second-hand machinery and curbs on the number of ports through which such imports would be allowed are also under consideration.

At present, there is no difference in the treatment of imports of new and used capital equipment. Most countries, including China, Thailand and Australia, have in place specific policies on second-hand machinery and capital goods imports.

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