Indian equipment makers fear losing out to Chinese

Indian equipment makers fear they would lose out to Chinese rivals as firms place orders only with tough conditions that add costs to their supplies. Among them are Larsen & Toubro and Gammon-Ansaldo, who hope to rival BHEL in India’s power equipment market.

Industry officials said that private power firms such as TATA Power, Reliance Power, Patel Engineering, Visa Power and Moser Baer Projects are asking equipment suppliers to give an undertaking that their foreign technology suppliers will ensure proper functioning of the equipment after delivery.

Technology providers, mostly in Europe, US and Japan, are not reluctant to provide such assurances, certification particularly to developing

countries like India, and they would give such an assurance, called joint deed of undertaking, only if they also get royalty payment, equipment makers say. This would make it uncompetitive against Chinese equipment.

Industry experts said private power firms are demanding such undertakings, following the trend set by state-run companies like NTPC, Damodar Valley Corporation and state generation companies.

Mr Ravi Uppal MD and CEO of L&T Power explained that when local players have established their credentials this kind of thing should not be insisted upon.

"The undertaking is being asked from local Indian companies for a joint venture, which they form with technology suppliers. In case of Chinese companies this doesn’t apply. Suppliers charge a cost for making domestic suppliers uncompetitive,” he said.