The Union Cabinet is expected to take up the proposal to slap import duty on power equipment soon despite continued opposition from the power ministry.
The Planning Commission has,however,supported the ministry of heavy industries proposal to impose customs duty on power equipment.
The power ministry has expressed its reservations over the proposal on the apprehension that equipment requirement of envisaged power generation capacity might not be met from domestic sources.
Specifically,the power ministry has argued that the biggest domestic power equipment supplier,Bhel,is already overbooked. If the power equipment import is restricted,it would be difficult to add power generation capacity at a required pace.
Besides,imposition of customs duty on power equipment would also raise cost of generation and increase tariff for consumers.
Orders have been placed for 80,000 mw projects under the power ministrys 11th Plan capacity addition. Of this,equipment supply orders worth 43,913 mw have gone to Bhel.
Meanwhile,the government has envisaged capacity addition of 1 lakh mw under the 12th plan programme. Against that,equipment supply orders have been placed for 62,550 mw. Bhel has bagged as much as 53% of orders placed for 12th Plan capacity addition so far.
In comparison,Chinese suppliers have bagged 25% orders.
To meet equipment requirement of the ambitious capacity addition envisaged by the government in coming years,Bhel has increased its manufacturing capacity from 5,000 mw a year to 15,000 mw a year,which it is further expanding to 20,000 mw.
The company plans to commission capacity expansion project by March 2012.