New Delhi permits import of Chinese power equipment
July 13, 2010

In a major reprieve to Chinese power equipment manufacturers, India on Monday decided not to impose security restrictions on Chinese power equipment imported into the country. Following security concerns on imported Chinese telecom equipment, New Delhi had imposed similar restrictions on power equipment imported from China in April this year. New Delhi had also made it difficult for Chinese engineers to get business visa’s to work their equipment at power plants in India.

A panel of senior officials called by the prime minister’s principal secretary and the national security advisor (NSA) including senior officials from the power ministry, the country’s security agencies and power companies said that the proposed “standalone equipment for plants and power systems do not have associated security concerns.” The panel, however, stressed the need to introduce secured smart grid systems. A smart grid system supplies power from the producer to the consumer through a two-way digital technology that can control electrical appliances at homes to save energy . It checks energy theft through smart metering and keeps track of electricity flowing in the system.

Earlier, Power equipment companies such as Adani, Reliance Power, Lanco and JSW Energy, were up in arms against the Indian government as their bottom lines were being severely hit with the ban on Chinese power equipment. Chinese equipment is 20-25 percent cheaper than domestically manufactured equipment. Indian power firms import about 50 percent of the total 92,717 MW power equipment orders placed in the 11th (2007-12 ) and 12th (2012-17 ) five-year Plans. Out of the total imports, the Chinese share is over 35,000 MW.

Another reason Chinese power equipment companies were restricted from exporting to India was because since the past year, Indian power equipment makers such as Bharat Heavy Electricals Ltd (Bhel) and Larsen and Toubro Ltd (L&T) lobbied against cheaper imports from China which are continuously subsidized by Beijing. Shanghai Electric Group Co. Ltd, Dongfang Electric Corp., Shandong Electric Power Construction Corp. (Sepco) and Harbin Power Equipment Co. Ltd supply a majority of India’s requirements to Indian power companies.

India’s decision to permit imports of Chinese power equipment comes just days after China’s official media strongly criticised India’s biased ban on Chinese telecom equipment. New Delhi had earlier released a list of 26 telecom equipment manufacturers which could not export to India based on security concerns since the equipment helped transfer data. 25 of the companies on the list were Chinese, while one is Israeli. China has been voicing its concerns on India’s lack of trust in diplomatic circles too, however most countries including the US and EU have similar concerns against Chinese equipment.

Being restricted from importing Chinese telecom equipment and running costly security tests on equipment imported from other nations is proving to be highly expensive for Indian telecom companies which already offer the lowest call rates worldwide. Tata telecommunications, the telecom arm of the Tata conglomerate on Monday resigned from the core membership of the Cellular Operator’s Association of India on the basis that industry lobby was not working in the universal interest of all its members, and it was representing the views of a few older players, namely the western equipment manufacturers.

While the governments still fix the kinks in deals between Chinese equipment manufacturers and Indian power and telecom companies that have come to rely highly on mainland imports, the move is a step in the right direction. India needs cheap, quality equipment that can be installed fast for its growing demands and China can supply it. India however needs to put in place stringent security standards that are clear, unbiased and transparent for Chinese equipment manufacturers to follow, and Chinese manufacturers need to provide a quality and security assurance to India only then will the future of equipment trade between India and China shine!


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