The Hindu Business Line : Power: A positive push for power

THE reduction in import duty on power and power transmission equipment from 25 per cent to 10 per cent will reduce the levies on imported electrical equipment by almost one-third.

However, given the vast scope for growth in the business, this should not have a major impact on top players such as ABB, Siemens and Alstom, who have an established presence.

Also these players will benefit from the reduction in input costs such as copper and electrical steel. Moreover, these players have sufficient cushion to take a cut in realisations and become price-competitive.

The power sector will also benefit from the reduction in duty on project imports from 25 per cent to 10 per cent.

Together with the incentives provided under the new Electricity Act, the current benefit is bound to help promote investments in the sector.

On the other hand, equipment manufacturers such as Jyothi Structures and KEC International will find the going tough as they will face stiff competition. The effective duty cut on electricity meters from 50.8 per cent to 17.4 per cent will impact Crompton Greaves, which derives 40 per cent of its revenues from the business.

The power equipment business is the thrust area and is the fastest growing business for Crompton Greaves.

This move could slacken the pace of growth for the company.

On the whole, Indian players such as Crompton Greaves, KEC International and Jyoti Structures, which started to breathe easy given optimism regarding economic growth, might once again have to rejig their cost structures to stay competitive.