Power Sector

Power: Neutral

Budget Proposals

* Parallel Excise Duty exemption for domestic suppliers who produce capital goods needed for expansion of existing mega or ultra mega power projects.

Budget Impact

The Budget 2011-12 did not have many significant direct measures for the Power and Capital Goods sector. It did send a positive signal with regards to the continued impetus being provided to the Infrastructure and Power Sector of the country.

The Finance Minister has ignored the specific demand by companies like BHEL and L&T to increase import duty on foreign equipment, which resulted in the lack of a level playing field for domestic manufacturers by keeping the rates unchanged.

The parallel excise duty exemption for domestic suppliers producing capital goods needed for expansion of existing mega or ultra mega power projects (UMPP) have been granted which will result in increased competition in the equipment space and hence may cut down the cost of projects for companies present in the UMPP space.

Companies like Tata Power and Reliance Power which are present in the UMPP space may witness positive vibes.