In a significant policy pertaining to the supply of equipment for power projects in the country, the Government is going to attach a rider making it mandatory for power equipment supply companies to have domestic manufacturing capabilities.

While this policy would not have an impact on orders that have already been placed, Minister of State for Power Jairam Ramesh said all projects that were yet to place orders would have to conform to this new condition. Pointing out that there would be an “absolute insistence on domestic manufacturing”, he said “domestic manufacturing will be a prerequisite for all (power) equipment suppliers”.

The minister said while orders to this effect were expected soon from the Prime Minister, he also said apart from the domestic manufacturing rider, the Government would also insist on power utilities/companies placing orders for standardised sets (each power set/unit has the same features and will have no or minimal variations) which would enable equipment suppliers to produce power sets on a large scale. This procedure was followed in China and a year back, this resulted in China adding 100,000 mw of fresh capacity in one year alone.

The Government’s move to attach the domestic manufacturing rider would have a dual affect. First, it would discourage companies sourcing equipment from China. According to estimates, around 20,000 mw of power equipment is expected to be sourced from China by 2020. Second, while Chinese companies are free to set up manufacturing capacities in India, the intention is to encourage domestic equipment companies to take up power equipment supplies in a big way.

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