BHEL up 3 percent as India imposes duty on Chinese insulators

The sun sets behind electric pylons in Allahabad February 22, 2006.

NEW DELHI (Reuters) - Shares of Bharat Heavy Electricals (BHEL) were up 3 percent on Wednesday after the government imposed a 35 percent safeguard duty on electrical insulators imported from China, in a bid to protect domestic manufacturers from cheaper shipments.

State-run BHEL, India's biggest power equipment maker, and other companies had complained that Chinese producers were resorting to predatory pricing to capture the market.

The customs and excise department of the finance ministry imposed the duty on Chinese imports for one year, to be lowered to 25 percent the year after that, according to a finance ministry notification dated December 20.

The notification was posted on the customs department website earlier, but was not widely reported by media until Tuesday.

"The duty has been imposed to protect domestic producers, and would be applicable on imported electrical insulators of ceramics or porcelain as well," a senior finance ministry official told Reuters.

He said imports of electric insulators mainly used by power transmission companies had gone up to 35,000 metric tonnes in the 2010/11 fiscal year, and said predatory pricing by Chinese producers was hurting domestic firms.

Officials estimate that imports from China have captured over 40 percent of domestic demand, and now contribute to around 90 percent of total imports.

The new tax will not be applicable on insulators used by the telecom companies or retail consumers, and excludes imports from other countries, the official said.

(Reporting by Manoj Kumar and Abhishek Vishnoi; Writing by Arup Roychoudhury; Editing by Sunil Nair)