Concerned over increasing presence of Chinese companies in the power sector, the government is contemplating a proposal to make it mandatory for foreign firms to set up shop in India before supplying power plant equipment.
Though government claims that the proposal is aimed at promoting domestic plant equipment suppliers like BHEL, L&T and others, the rider may turn out to be a disadvantage for Chinese companies.
Minister of state for power Jairam Ramesh said, "In future, domestic manufacturing is going to be the yardstick for supply of power plant equipments. We want to promote domestic plant equipment suppliers." It is felt that Chinese companies have a cost advantage over domestic firms as they operate on a larger scale.
With this rider, the Chinese companies will have to set up units in India which will take away the cost advantage and push them out in the bidding process. Sources in the power ministry said that according to technical assessment, Chinese companies were set to supply power equipment for 18,000 to 20,000 MW capacity addition by 2020.
The ministry's proposal for a pre-condition of domestic presence is going to get the PM's approval very soon, said a senior ministry official, adding that the proposal aimed to discourage imports in the sector. The power ministry is targetting capacity addition of around 78,000 MW in five years and the target for 2008-09 is 11,061 MW, which is going to increase the demand for supply of power plant equipment.
For the year 2008-09, Chinese companies are going to supply equipment for 600 MW capacity addition, Shanghai Electric Co for 600 MW and CMEC for 117 MW.
BHEL will be able to supply equipment for capacity addition of around 15,000 MW,while L&T will meet the demand for capacity addition of 4,000 MW per year.
Though government claims that the proposal is aimed at promoting domestic plant equipment suppliers like BHEL, L&T and others, the rider may turn out to be a disadvantage for Chinese companies.
Minister of state for power Jairam Ramesh said, "In future, domestic manufacturing is going to be the yardstick for supply of power plant equipments. We want to promote domestic plant equipment suppliers." It is felt that Chinese companies have a cost advantage over domestic firms as they operate on a larger scale.
With this rider, the Chinese companies will have to set up units in India which will take away the cost advantage and push them out in the bidding process. Sources in the power ministry said that according to technical assessment, Chinese companies were set to supply power equipment for 18,000 to 20,000 MW capacity addition by 2020.
The ministry's proposal for a pre-condition of domestic presence is going to get the PM's approval very soon, said a senior ministry official, adding that the proposal aimed to discourage imports in the sector. The power ministry is targetting capacity addition of around 78,000 MW in five years and the target for 2008-09 is 11,061 MW, which is going to increase the demand for supply of power plant equipment.
For the year 2008-09, Chinese companies are going to supply equipment for 600 MW capacity addition, Shanghai Electric Co for 600 MW and CMEC for 117 MW.
BHEL will be able to supply equipment for capacity addition of around 15,000 MW,while L&T will meet the demand for capacity addition of 4,000 MW per year.
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