US urges India to refrain from
raising duty on power gear imports
CONCERNED over the Union
government's proposed duty hike on power equipment imports, the US has urged
India to refrain from raising the duty on import of such equipment, official
In a communiqué to the Prime
Minister, Dr Manmohan Singh, the US Trade Representative, Mr Ron Kirk, expressed
apprehension that the 21 per cent duty hike, meant to safeguard domestic
equipment firms like L&T and BHEL from 'cheap and low quality' Chinese
imports and to create a level playing field, would also end up hurting American
equipment majors like General Electric.
Mr Kirk believes that the duty
hike would end up making power gear imports more costly and, in turn, result in
higher electricity costs for consumers.
The Association of Power
Producers (APP) had notified the Power Ministry that raising the Customs duty on
equipment imports would further increase electricity tariffs and lead to delays
in capacity addition. It also pointed out that about half of the coal-based
capacities were dependent on power equipment imports.
While highlighting the fact that
financial problems, fuel availability concerns and the sorry state of
distribution utilities had already led to higher generation costs, the APP
contended that any hike in import duties at this juncture would adversely affect
not only the sector, but also the economy.
While the Prime Minister's Office
had directed the Power Ministry to apprise the Cabinet on the proposed duty
hike, the Ministries of Commerce, Finance, Heavy Industries and Power are at
present holding discussions on the issue, the sources said.
With a 5 per cent Customs duty on
equipment imports for below 1,000 MW projects already in place, sources
expressed fears that the proposal to hike duties would end up hitting ultra-mega
power projects enjoying exemption at present.
Experts feel that Mr Kirk's communiqué assumes
significance in the backdrop of the recent differences between India and the US
on a host of trade and investment issues.
Source : Exim
News Service - NEW DELHI, July 16