IEEMA calls for immediate imposition of import duty on power equipments

Debjoy Sengupta, ET Bureau Jun 21, 2012, 09.36PM IST

Tags: transmission & distribution| power equipments| mega and ultra-mega power projects| IEEMA

KOLKATA: The Indian Electrical & Electronics Manufacturers' Association (IEEMA) has called for immediate imposition of import duty on power equipment for mega and ultramega power projects over 1,000 mw. Ramesh Chandak, President, IEEMA said in a statement: "This issue of providing a level playing field for domestic manufacturers of electrical equipment vis-a-vis imported equipment has been debated and discussed for long at the highest levels of the government and action must now be taken immediately. There is equally a strong case for even increasing import duty on transmission & distribution (T&D) equipment and generation equipment for non-mega projects." According to IEEMA, immediate imposition is required since the entire industry is in doldrums because of the sluggish growth in the power sector. The escalating import of electrical equipment poses a danger of making the sector commercially unviable. This industry accounts for 10.56% of the manufacturing sector in terms of value and 1.5% of the GDP. It also provides direct and indirect employment to 1.5 million people and over 5 million across the entire value chain. The Indian electrical equipment industry touched Rs 1, 10,000 crore in 2010-11. It comprises of two segments - generation equipment which is 24% of the industry, and T&D and allied equipment which constitute the rest at 76%. T&D equipment manufacturers are working at only 65% of their production capacity. In the last few years, the domestic manufacturing capacity of generation equipment has being ramped up and currently stands at 20,000 mw per annum against a requirement of about 16-17,000 per annum. With 6-7 joint ventures coming up in India, the capacity will increase to 40,000 mw per annum by 2014-15. The power generation capacity addition target for the 12th Plan may also be scaled down to about 75,000 mw. As a result, even the generation equipment sector will soon be sitting on huge surplus capacity. During the last five years, India's imports of electrical equipment imports have increased at a CAGR of 28.28% and were at $11 billion in 2010-11. Import duties on most products are quite low and are being further lowered under the various FTAs signed by India. There is uncertainty in the power generation sector due to unavailability of fuel / lack of coal linkages for new projects, land acquisition issues, delays in environmental and other clearances, etc., which is impacting the downstream T&D sector. All this is directly impacting the domestic electrical equipment industry as demand is not picking up.

Assured availability of quality power at competitive rate is a sine qua non for industrial and economic development of India. For an efficient and developed power sector in a country of India's size, a strong domestic electrical equipment manufacturing base is essential and also strategic.