Cabinet slaps 21% duty on import of power equipment

The government today decided to slap 21% duty on imports of power equipment, mainly to protect domestic companies from cheap Chinese shipments.

“Cabinet has approved levying 21% import duty on power equipment sourced from overseas,” sources said.

The Cabinet has approved 5% basic customs duty, 12% counter-veiling duty and 4% special additional duty on import of power gear.

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Our View: This step was long overdue as the major players in the Power equipment were lobbying that increasing duty on cheap imports of power equipment from China was not giving them a level playing field. However experts say that imposition of higher duty will not matter much as the duties are applicable from Aug-Sept 2012 for the project that will be awarded in 2012-2022, the orders for the current plan (2012-2017) have already been placed.
Also, a number of manufactures from Korea/China have formed Joint venture with Indian companies here in India.These joint ventures will also be protected by the duty hike.

Therefore the euphoria in power equipment manufacturer stocks was short-lived even after the Cabinet cleared the imposition of duties on imported equipment. Stocks of power equipment manufacturers such as Bharat Heavy Electricals and Larsen & Toubro opened higher, but after the first hour of trades these stocks were trading in the negative territory.

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