India-China tension: Government to curb import of power equipment from China

To curb import from China in the power sector, the Centre is planning a number of measures including custom duty on solar modules, malware checking on Chinese products, and increase domestic production of electrical equipment.

Union Minister for Power and Renewable Energy R K Singh, who held series of meeting with power producers and equipment makers for the past two days, told reporters here on Thursday that the government will raise the basic customs duty on solar modules to 40 % in a year, after initially levying 20 to 25 % from August.

For solar cells, the customs duty will start at 15 % this August and will be raised to 30%. Based on a recommendation from the Power Ministry, the Ministry of Finance is studying the issue.

The proposal will be a big blow to China, which supplies 85 to 90 % of the equipment used in the solar energy sector in India.

Besides, the decision also was taken that since the power sector is a sensitive sector, any power equipment imported from China will be checked for malware.

In the meeting with power producers and equipment makers, the government requested them not to import any products which are already available domestically. The companies should be working to produce the products, which is not available in the domestic market, the Minister said.

The government's decision came following pressure to check import from China after strained relation between two countries after border standoff. The Telecom Ministry already asked BSNL no to use any telecom products from China while the Indian Railway cancelled signalling contract given to Chinese company for a dedicated freight corridor.

To prevent importing of poor quality products from China, the Power Ministry also has suggested stringent quality standards for imports of all kinds of power equipment.

The government is also planning to put another layer of checks at the ministry level by ensuring that all import proposals from countries including China should get prior approval of the Ministries of Power and of New and Renewable Energy.

The government is likely to scrap the issuing concessional custom certificates for certain import items in the renewable sector. The government hoping that this would encourage importers to look within the country for equipment.

The Ministry of Power and Renewable Energy has asked the public sector financiers Power Finance Corporation (PFC), Rural Electrification Corporation and the Indian Renewable Energy Development Agency (IREDA) to structure their financing to those domestically produced equipments.