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Capital Goods
In its bid to fast track the power generation capacities, the Government of India (GoI) had permitted import of
equipment for mega power projects (1,000MW and above for thermal) at nil duty, while 5% duty is being levied on
i import for smaller projects. The thought process for such action may be attributable to the inability of the local
manufacturers to meet the growing demand, while the Chinese equipment is relatively inexpensive and readily
available. The Chinese equipment makers, much like other exporters from China, also benefit from the low interest
rates and an undervalued currency to boost exports.
The BTG capacities in India have been increasing significantly during the last year post the expansions undertaken
by BHEL and Larsen & Toubro. In addition, companies like BGR Energy, Thermax and Bharat Forge are also in the
midst of setting up new facilities for manufacturing power equipment.
Amidst the backdrop of the ongoing capacity expansions, the Indian power equipment manufacturers have been
demanding imposition of customs duty to ensure a level playing field, while the IPP developers have been lobbying
for cheaper imports. Going by the inclination of the GoI to encourage domestic manufacturing, it might consider
this industry demand in the upcoming budget.
Additionally, fund allocation to the various programs including the APDRP and RGGVY would continue to provide a
fillip to the transmission line players. Overall, we expect the Budget to be Positive for the Sector.
Budget Expectations
Head Current Status Expected Change Potential Impact
Import duty on Power
Generation equipment
No import duty on
foreign equipment for
Mega Power Projects.
Increase in Import Duty.
Will reduce the price differential between domestic and overseas
players (especially the Chinese). Positive for BHEL, L&T and other
new players planning to establish a domestic manufacturing base.
Charged at 5% for
smaller projects
Fund Allocation for
T & D.
Fund allocation for
various programs
including the APDRP and
RGGVY.
Expected to continue.
Positive for various transmission line players (including Jyoti
Structures KEC International and Kalpataru Power), as it provides a
continuing business opportunity.
Top Picks
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Capital Goods
In its bid to fast track the power generation capacities, the Government of India (GoI) had permitted import of
equipment for mega power projects (1,000MW and above for thermal) at nil duty, while 5% duty is being levied on
i import for smaller projects. The thought process for such action may be attributable to the inability of the local
manufacturers to meet the growing demand, while the Chinese equipment is relatively inexpensive and readily
available. The Chinese equipment makers, much like other exporters from China, also benefit from the low interest
rates and an undervalued currency to boost exports.
The BTG capacities in India have been increasing significantly during the last year post the expansions undertaken
by BHEL and Larsen & Toubro. In addition, companies like BGR Energy, Thermax and Bharat Forge are also in the
midst of setting up new facilities for manufacturing power equipment.
Amidst the backdrop of the ongoing capacity expansions, the Indian power equipment manufacturers have been
demanding imposition of customs duty to ensure a level playing field, while the IPP developers have been lobbying
for cheaper imports. Going by the inclination of the GoI to encourage domestic manufacturing, it might consider
this industry demand in the upcoming budget.
Additionally, fund allocation to the various programs including the APDRP and RGGVY would continue to provide a
fillip to the transmission line players. Overall, we expect the Budget to be Positive for the Sector.
Budget Expectations
Head Current Status Expected Change Potential Impact
Import duty on Power
Generation equipment
No import duty on
foreign equipment for
Mega Power Projects.
Increase in Import Duty.
Will reduce the price differential between domestic and overseas
players (especially the Chinese). Positive for BHEL, L&T and other
new players planning to establish a domestic manufacturing base.
Charged at 5% for
smaller projects
Fund Allocation for
T & D.
Fund allocation for
various programs
including the APDRP and
RGGVY.
Expected to continue.
Positive for various transmission line players (including Jyoti
Structures KEC International and Kalpataru Power), as it provides a
continuing business opportunity.
Top Picks
- BGR Energy
- Crompton Greaves
- Jyoti Structures
- KEC International
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