Bharat Heavy Electricals Ltd. gained the most in almost nine months as India’s power equipment makers sought a 14 percent import duty to fend off cheaper products from overseas.
The shares climbed 4.3 percent to 329.20 rupees at the close in Mumbai, the most since Feb. 14. Officials from companies including Bharat Heavy and Larsen & Toubro Ltd. met Heavy Industries Minister Praful Patel in New Delhi today.
Chinese suppliers have won contracts in India, where plans to increase electricity generation have attracted investments in power-equipment manufacturing from companies including Larsen & Toubro and Toshiba Corp. State-owned Bharat Heavy, India’s biggest power equipment maker, may win support for an import tax to deter Chinese rivals ahead of a planned share sale.
“The shares are moving up because there is positive sentiment around the potential 14 percent import duty after today’s meeting,” said Bhargav Buddhadev, vice president at Ambit Capital Pvt. “There is nothing different between last year’s plan and this year’s, except that the government may want to push this through to promote Bharat Heavy’s share sale.”
At least half of the equipment to be used in new power plants may come from China, where cheaper equipment is manufactured more efficiently, said Subhranshu Patnaik, a senior director at Deloitte Touche Tohmatsu India Pvt.
Bridging a Disadvantage
“The domestic industry is almost in a helpless position,” Patel told reporters today. “We’re not saying there should be no imports but the ministry is in full support of a 14 percent duty.”
A panel headed by Planning Commission member Arun Maira recommended in 2010 the levy of 14 percent in import duties to “bridge the disadvantage” faced by local manufacturers against overseas rivals, especially from China.
“We are asking for a level playing field, we are not asking for any special protection,” Bharat Heavy Chairman B. Prasad Rao told reporters in New Delhi after today’s meeting. “There is agreement that the old argument about indigenous manufacturing not having enough capacity to carry India is no longer valid.”