Home / Politics / Policy /  Government weighs tariff wall to keep lid on China imports

India is considering erecting tariff barriers and other obstacles, including subsidizing finance for promoting local power equipment usage and prior-permission requirements for imports from countries with which it has a conflict, as part of a broad economic response to Chinese aggression in Ladakh.

Countries that are adversaries or potential adversaries will be identified as “prior reference countries" and government permission will be required before importing any equipment from them, power, new and renewable energy minister Raj Kumar Singh told business leaders in New Delhi on Tuesday. The proposed overhaul of norms for the power sector will also include rigorous testing of foreign equipment.

The policies, primarily aimed at curbing usage of Chinese equipment in the power sector, is part of a wider decoupling exercise from China that has been initiated by the Indian government since the 15 June border clashes between the two sides that left 20 Indian soldiers dead.

These policies will be applicable across power generation, distribution and transmission projects—both in the conventional and the green energy space.

Data from the Directorate General of Commercial Intelligence and Statistics shows that power sector equipment like transmission line towers, conductors, industrial electronics, capacitors, transformers, cables and insulators and fittings which are made in India, are still being imported, the power ministry said in a statement, citing Singh.

Singh cited the strategic nature of the power sector to emphasize the need for companies to use locally manufactured equipment. Imported equipment will be thoroughly tested to prevent any ‘trojan’ or malware slipping through.

India’s power infrastructure is facing a spate of cyberattacks, with at least 30 events reported daily, Mint reported on on 11 September. A majority of the attacks originate from China, Singapore, Russia and the Commonwealth of Independent States countries.

This has stoked concerns among the government that it could be the target of enemy forces looking to cripple India’s economy. A grid collapse is the worst-case scenario for any transmission utility.

As a first step towards increasing self-reliance in the power sector, all imported solar cells, modules and inverters will attract a basic customs duty starting 1 August. This will make imports from China expensive and will replace the safeguard duty on solar cells and modules imported from China and Malaysia, which expires on 29 July. This may result in a 20 paise increase in solar tariffs for new contracts.

Also, to ensure that the already bid out projects and the electricity tariffs quoted are not hit, the government is working on an exemption criteria for earlier awarded projects from the new rules. The government is collating details about these projects along with their tentative equipment import date.

The power ministry will also prepare a list of approved manufacturers for government supported schemes, including projects from where electricity distribution companies procure electricity for supply to their consumers.

A similar approved list of modules and manufacturers exists for the clean energy sectorthat will become applicable from 1 October. Singh said that tariff walls will be built so that products are not dumped in India.

He added the policy framework will prepare local manufacturers to cater to demand over the next 2-3 years.

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