A proposal to charge a tax of twenty percent on imported power equipment has been rejected by the finance ministry. They cited the reason of domestic capacity being less in demand.

In addition they also claimed that the acceptance of the proposal that had been suggested would make the cost of electricity shoot up considerably.

A government official who had prior notice of the happenings of the ministry spoke to the ET. He said that a certain cabinet note had been passed within the power ministry seeking higher taxes to be levied.

Fearing that such hikes in taxes would ultimately raise the cost of building power plants the finance ministry turned down the suggestion yet again.

BHEL that leads the local equipment suppliers are adopting tedious measures to satisfy the colossal demands being made by the leading power firms they are associated with.

These power firms are re-doing their factories and upgrading their machines to provide 80,000 MW. This is a part of their Eleventh Plan that should hopefully be executed by the year 2012.

The government official added that any change in the structure of duties or any hike in taxes should be implemented, only after two years when the new Twelfth plan comes into action.

BHEL is supposed to meet fifty five percent of the market demand while the rest of the machinery and equipment will have to be imported.

China itself should be able to satisfy twenty percent of the demand in the Indian markets, the government official said. By the year 2012-13 even the domestic capacities are likely to catch on with the demands of the power firms. However, the demand from power firms is still expected escalate relentlessly.

The government is hoping another 100,000 MW capacity to be added within the plans that are to be executed in the next five years.