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  3. Heavy Industry Ministry pitches for higher import duty on power equipment

Heavy Industry Ministry pitches for higher import duty on power equipment

02 Dec 2014 Evaluate

With an aim to boost power generation capacity of India, the Heavy Industry Ministry pitched for doubling the basic import duty on power generation equipment. The Ministry demanded that duty to be raised to 10 per cent from 5 per cent and the countervailing duty to be brought to nil.

In 2012, the previous government had ended the difference on basic import duty between power projects, underscoring that the same rate of duty would apply to all projects in the sector, irrespective of capacity. After that, electricity generation equipment for mega power projects / ultra mega power projects of 1,000 MW and above also attracted duty. The duty imposed was 5 per cent basic Customs duty, 12 per cent countervailing duty (CVD) and 4 per cent special additional duty (SAD) taking the duty to 21 per cent. In addition to this, there was education cess and the final rate stood at 22.85 per cent.

The Ministry is of the view that if the basic import duty is raised to 10 per cent, and the countervailing duty brought to ‘nil’, domestic manufacturers will get effective protection, in comparison with foreign manufacturers. Besides import duty, all other taxes and charges are paid by both foreign and domestic manufacturers. If CVD is nil, domestic companies will not be required to pay excise duty, thus raising the effective protection from current around 4.7 per cent. Further, the ministry also highlighted the need to exempt more power projects from paying higher duty as they accounted for the bulk of power generation capacity to be added during the 12th Plan period.

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