Union Budget 2013: India electrical industry hopes | SupportBiz

Policy Notes

Union Budget 2013: India electrical industry hopes

While the policy makers are busy finalizing the final draft of the most sought after document for the Indian economy, the Union Budget 2013-14, industry veterans like VP Mahendru, Chairman – Managing Director, Eon Electric Limited, are trying to raise their voices.

In an interaction with SupportBiz, Mahendru highlighted some concerns of  the Indian electrical industry and his wishlist from the  upcoming budget.

Edited excerpts:

What are the key concerns that you have for the growth of India’s electrical industry?

The fast diminishing availability of fuel, including coal, to produce electricity has made it  essential for power to be used  more efficiently. Indian companies   are involved in world-class power generation, transmission and manufacturing other electrical products. The indigenous manufacturers of these items are capable of improving the quality further and producing  them more economically, but for that to happen, the government has to provide a concessional duty structure that encourages domestic manufacturing.

What are your expectations from the Union Budget 2013-14?

We would like to recommend that, in the upcoming budget, the import duty on raw materials used in manufacturing power-efficient lighting products and lithium ion batteries is abolished  or, at least, reduced. . This will automatically cut down the overall production cost, and will facilitate easy availability of these power-efficient products at affordable prices to even the lowest segment of the economy, as the demand  for such products is rising fast.

The present import duty on raw materials is around 20%, which should be reduced to nil or, at the maximum, 2%. 

The government should also consider eliminating or, at least, reducing excise duty, central and local taxes on the trade of such finished goods within India. By reducing  these taxes, which currently add up to 30%  of the production cost, to 0-5%, or by eliminating them altogether, the government will help encourage wider use and distribution of energy-efficient products in different parts of the country at a low cost.

What  measures can be adopted  to help  utilize  our energy resources at  the optimum level?

The use of lithium ion batteries must be motivated. They   can replace oil-based power generation for transmission towers and auto vehicles,   thus  saving   fast diminishing minerals  like oil and coal, as  lithium ion batteries use solar power.

Another important need is to promote exports of  finished energy-efficient electrical products to African and Middle-East countries. This will help Indian companies set up large manufacturing plants in India. Large-scale manufacturing will further reduce the prices of energy-efficient LEDs and lithium ion batteries and, thus, encourage wider use of these  cost-effective  products.

Growing competition from  Chinese  products is also a serious concern for  Indian electrical product manufacturers. What measures would you like to suggest to counter this?

We are facing a strong threat from Chinese competitors, who   receive a huge amount of support  from the Chinese Government.  They are able to export cheaper quality equipment to Indian markets. This is hampering our competitiveness. The government should put a check on such imports  by making the ISI mark mandatory  on  imported goods. This will help  discourage the import of low-quality products   and also protect the interests of Indian users.

Overall, we expect the government to  help build  a stable business environment through policies  that are transparently and expeditiously implemented.