Indian import duty hike hits mainland stock prices

PUBLISHED : Tuesday, 21 February, 2012, 12:00am
UPDATED : Tuesday, 21 February, 2012, 12:00am
 

Mainland power-generation equipment makers saw their share prices slide after the Indian government proposed slapping a 19 per cent duty on imports of equipment from China.

In 2010 a panel of the Indian Planning Commission proposed a levy of 14 per cent on imports to 'bridge the disadvantage' faced by local manufacturers against overseas rivals, according to Bloomberg.

Chinese suppliers won 34 per cent of new equipment orders for additional capacity planned in India in the five years to March 31, it reported, citing Ministry of Power data.

'I have received feedback from the concerned ministries and am confident that the cabinet will approve our proposal some time in the next two weeks,' it quoted Power Secretary P. Uma Shankar as saying on Sunday.

The Indian Express reported on Sunday that the Finance Ministry had given its consent to a 5 per cent custom duty, a 10 per cent countervailing duty and 4 per cent additional duty, totalling 19 per cent. The countervailing duty would be imposed if the nation of import was considered to have 'grossly subsidised' the product in question, the report said, adding that the matter was expected to be brought before its committee of economic affairs by the end of this month.

'If the duty is passed, it will have a certain impact on foreign power equipment suppliers in terms of future orders and most orders placed in the past few years are designed for mega-size plants,' Daiwa Securities regional head of utilities research Dave Dai said.

He expected the proposed duty and the depreciating rupee to erase the price advantage Chinese products had against those from India, although their profit would only be affected a few years later when order backlogs were cleared.

The rupee sank 22 per cent from 44 to US$1 last July to 53.8 last December, before rebounding around 8 per cent to 49.2 currently.

29%

The share of Harbin Power Equipment's backlog owned by India. It accounts for 26 per cent of Shanghai Electric's backlog

Share

 

Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive