BHEL, a leading power equipment maker, recently informed the government that "Chinese producers are quoting predatory prices (for electrical insulators) purely to increase their share of the Indian market".
Electrical insulators are materials that help in stabilising the flow of electricity through grids.
Going by information provided by various domestic entities to the government, predatory pricing tactics of Chinese players are hurting the local industry.
"... the share of domestic producers in the PGCIL orders, who accounts for 50-70 per cent of insulator consumption in India, has come down from 90 per cent in 2007-08 to presently just 10 per cent as the remaining share of orders has been captured by Chinese suppliers," according to information given by domestic players to Directorate General of Safeguards (DGS) in the Finance Ministry.
Acting on the complaint of domestic manufacturers, DGS has imposed 35 per cent safeguard duty on electrical insulators imported from China, a move aimed at helping domestic players compete effectively with cheap shipments.
According to information given to the DGS, despite successful technical bids, Indian bidders have lost orders just because prices quoted by Chinese producers were much lower than prices offered by domestic firms.
"The company (BHEL) is reported to be suffering significant financial losses and despite having enough capacity to manufacture and supply, it has been unable to receive orders for HVDC Insulators due to steep reduction in prices by the Chinese manufacturers," a DGS document said.
The government's safeguard duty on certain insulators would be for a period of two years -- 35 per cent for first year and 25 per cent in the subsequent year.
The DGS, after a probe following the domestic industry complaint, said: "It will be in the public interest to impose safeguard duty on import of electrical insulators from People's Republic of China."
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BHEL shares gain over 2% as govt imposes duty on Chinese insulators
Shares of BHEL today gained over 2 per cent after the government imposed 35 per cent safeguard duty on electrical insulators imported from China, a move that would help domestic players battle cheap shipments.
After surging little over 3 per cent during the day, shares of the company finally settled at Rs 238.30, up 2.38 per cent on the BSE.
On NSE, the stock ended 2.19 per cent higher at Rs 237.70.
Shares of Aditya Birla Nuvo also ended the day on a positive note with a gain of 0.21 per cent at Rs 1,118.20.
The safeguard duty on certain insulators would be for a period of two years -- 35 per cent for first year and 25 per cent in subsequent year, according to the Revenue Department.
The move follows recommendations for the imposition of the duty by the Directorate General of Safeguards (Customs & Central Excise).
Meanwhile, in the stock market the BSE benchmark Sensex ended at 19,714.24, up 133.43 points.