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The role of Chinese power equipment in Indian power plants has been a
long-standing subject of both controversy and academic interest.
Chinese boilers and turbines have perhaps generated more debate than
electricity! Whatever be the countervailing force that India is trying to create
either by preemptive policies or domestic equipment manufacturing capacity,
China's role in the Indian power sector is only intensifying. It is expected that
during the XII Plan period, nearly a third of new thermal power capacity will be
based on Chinese equipment.
India has been trying hard to find solutions to placate the Chinese juggernaut
but without much success. It is reported that the ministry of heavy industries is
planning to withdraw the import duty concessions granted for mega power
projects. This means that no matter what the capacity of the power plant for
which equipment is being proposed, there will be no import duty concessions.
This could bring some respite to Indian equipment suppliers that have been
crying hoarse over Chinese equipment impinging on their business.
The stage for power equipment is very interesting. Traditional supplier Bharat
Heavy Electricals Ltd (BHEL) is on the verge of a major expansion, while a
plethora of Indian companies (in joint venture with multinationals, but not
Chinese players) are putting up manufacturing capacity to serve the growing
market. India is expected to add around 15,000 mw of new power capacity—
mostly thermal—in the coming years. This presents a great opportunity for
equipment suppliers—domestic or otherwise.
Even though the withdrawal of import duty concessions might bring in some
parity between Chinese and domestic equipment, one cannot disregard
certain innate qualities of Chinese equipment. Apart from price—Chinese
gear is around 20 per cent cheaper—China has been able to provide
equipment with minimum lead time. It would be incorrect to say that private
power producers are going in for Chinese equipment by choice; it is rather
because of limited attendant alternatives. Government agencies would stay
away from Chinese equipment in keeping with their national interest
ideologies. Both forms of ownership are without much choice regarding
their attitude towards Chinese suppliers.
Unmindful of the Chinese debate, there is a disconcerting possibility on the
horizon. In the next 3-4 years, India's power plant equipment capacity is
likely to be at least 35,000 mw per year going by the plans underway by
existing and new players. Besides, China will continue to be present—a
possible fall in market share notwithstanding. Thus, the power equipment
shortage that India is now facing will fast transmute into excess capacity.
China might very well end up making most of the current peak demand,
leaving a shrinking market for the new entrants. Even if import restrictions
are put now, China will have already made most out of it. China's biggest
advantage has been in being at the right time at the right place. After all,
the Chinese spell does appear unbreakable!
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