Global power companies want more cuts in taxes

Global power companies want more cuts in taxes

Global power equipment manuafacturing companies, keen to set up base in India, are lobbying with the government to allow them duty-free import of machinery needed for setting up their manufacturing facilities.

Power equipment manufacturing companies already benefit from zero import duty on inputs—which means they do not have to pay any duties on components that go into the manufacture of finished goods. Now, they want this benefit extended to the import of machinery for setting up the infrastructure.

The government has not complied so far.

“Several players including Mitsubishi Heavy Industries(MHI), Toshiba Corp., Hitachi, Dosan, Siemens, Alstom, LMZ(Russia), Technoprom(Russia) and Dongfanghave been asking us for zero duty asset import for quite some time. We do not see that happening," said a senior government official, who did not wish to be identified.

Dongfang and Larsen & Toubro Ltd(in association with MHI and Toshiba, respectively) plan to set up manufacturing facilities in India involving substantial investments. For example, L&T’s proposed facility with Toshiba for manufacturing turbines may entail an investment of Rs2,250 crore.

These proposed facilities will manufacture equipment with super critical technology capacities—660MW and 800MW. At present, the public sector Bharat Heavy Electricals Ltd (Bhel) is the country’s only manufacturer of turbines of comparable capacity.

And that is part of the problem. India needs competition in the power equipment manufacturing sector as it will lower costs and help power project developers get better rates from equipment suppliers.

Compared to India, which at present has only one power-generation equipment manufacturer in Bhel, China has four companies. Analysts say that this is the reason for China adding five times the power generation capacity as compared with what is being added by India every year.

India has a present power generation capacity of 1.28 lakh MW. In the tenth plan period (2002-07), only 20,950MW has been added as against a target of 41,110MW. And, at least part of the blame is being attributed to the limited power generation equipment manufacturing facility that exists in the country.

Mitsubishi, Hitachi and others are seeking

duty-free imports of machinery needed to set up infrastructure