In the backdrop of complaints by domestic power equipment firms against duty-free imports, heavy industries minister Vilasrao Deshmukh today said the surge in import of capital goods was on account of failure of the domestic manufacturers to meet the rising demand.
Power equipment majors like BHEL and L&T have been protesting against duty-free imports from China.
“The capital goods industry has failed to ride the manufacturing boom and has not been able to meet the entire requirement of the user industries. This has resulted in the gaps being filled through imports of various sub sectors of capital goods,” he said at a Ficci function here.
The minister agreed that there was a case for imposition of import duty on power equipment to give a level-playing field to the domestic players.
“Local manufacturers should get protection. Unless and until they get protection, nobody will come and invest. The ministry would again approach the finance ministry for imposition of 14 per cent duty on imports of power equipment,” Deshmukh said on the sidelines of the function.
Asked if the matter requires the Prime Minister’s Office intervention, Deshmukh said, “Not at this stage... If needed, I will definitely meet the prime minister. We have been trying to convince the finance ministry and once they are convinced, we will go before the Cabinet.”
He said to enhance competitiveness of the capital goods industry at the global level, a scheme has been envisaged for consideration of the Expenditure Finance Committee in the Ministry of Finance.
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It includes setting up of four common facility centres covering sub sectors — machine tools, textile machinery, heavy electrical equipment, and two capital goods specific industrial clusters.
“Finance department has agreed to provide Rs 300 crore and may be next year we will reach up to Rs 1,000 crore to create this cluster and other facilities required for capital goods,” Deshmukh said.
At present, the capital goods industry contributes 12 per cent to the total manufacturing activity and the manufacturing contribution to the country’s GDP is 16 per cent.