Reading Time: 2 minutes
The Centre has accepted in principle the relaxation of restrictions for Central Public Sector Enterprises (CPSE), engaged in commercial renewable energy projects that import components from China.
CPSEs that are involved in renewable energy (RE) projects, will soon be allowed to import components from China. This is in addition to the 2020 restrictions which prohibited them from purchasing items from India.
The exemption will allow NTPC and other CPSEs involved in RE projects to reduce costs by directly importing from Chinese bidders/companies without the requirement of Indian registration. At a recent meeting, the Cabinet Secretary gave the go-ahead to the exemption to CPSEs. The Ministry of New and Renewable Energy will now submit a formal proposal for the Finance Ministry to include the exemption clause.
After clashes at Galwan, July 2020, a ban on CPSE imports from China-based companies and other countries with whom India shares a border was imposed. However Mission Atmanirbhar Bharat was cited as having introduced Rule 144 (xi), the General Financial Rules which govern Indian public procurement.
Rule 144 (xi), to GFR, required that any bidder representing a country for goods/services such as consultancy and non-consultancy service and turnkey projects that share a land border or other physical borders with India be registered with an appropriate authority.
This applies to all autonomous bodies and public sector banks, financial institutions, PPP projects, and other government departments, as well as the ministries and departments of the Government. Among other CPSEs involved in RE Projects, NTPC was also included under GFR Rule 144(xi).
However, import dependence in the RE sector is still high and is mainly addressed by Chinese firms. The registration requirement placed CPSEs in serious pricing disadvantages vis-a-vis their private sector counterparts. CPSEs often had to import the same via EPC contractors they hired. This inevitably increased the project cost and was a major problem for CPSEs at a time when RE projects are being scaled up.
This relaxation has allowed CPSEs to import materials from China for renewable projects, allowing them to compete with private sector firms.do not face import restrictions.