CorporateCustoms duty cut for brownfield power projects
A Union finance ministry notification has extended the basic customs duty concession applicable on equipment for entirely new (‘greenfield’) power projects to expansion (‘brownfield’) of existing units, too.
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Issued on December 11, it says the basic customs duty of 2.5 per cent would now be applicable on brownfield expansion of existing mega projects. At present, the applicable duty is 17 per cent.
All other benefits under the mega power policy available to greenfield projects would also be available to expansion units, regardless of capacity thresholds under earlier rules.
The notification would benefit several players in the public and private sectors, including India’s largest power generator, NTPC, as well as various state-run generation companies. So, too, for many others such as Tata Power, Reliance Power, GMR and GVK.
Apart from the proposed capacity addition target of 78,700 Mw in the ongoing (11th)Five-Year plan, which runs till 2012, there is an estimated addition of 80,000 Mw by producers over the 12th Plan.
A senior power ministry official told Business Standard on Monday, “The cabinet had already given its clearance for the revised mega power policy applicable for thermal (coal, gas, lignite and nuclear) and hydro power projects. However, the notification from the finance ministry was awaited. The whole focus is on the promotion of technology transfer and indigenous manufacturing in the field of supercritical power equipment.”
The official noted that concessions and benefits of the mega power policy are also being extended to supercritical projects (660 Mw and above), with the mandatory condition of setting up indigenous manufacturing facility, provided they meet the eligibility criteria.