Search the Internet          Tips  Sites: Finance, Investment

Sector Focus : Other Capital Goods

(per cent)	Tariffs (per cent)
	Customs		Excise
	2000-01	2001-02	2000-01	2001-02
General machinery	27.5	25.0	16.0	16.0
Parts	27.5	25.0	16.0	16.0
Specified textile machinery	16.5	5.0	16.0	16.0
Parts of specified textile machinery	16.5	5.0	16.0	16.0
Machine tools	27.5	25.0	16.0	16.0
CNC systems	27.5	25.0	16.0	16.0
Cutting tools	27.5	25.0	16.0	16.0
Milking and dairy machinery	27.5	25.0	16.0	16.0
High speed steel/alloy steel	27.5	25.0	16.0	16.0
Steel plates	27.5	25.0	16.0	16.0
Seamless steel tubes	27.5	25.0	16.0	16.0
Clad plates	27.5	25.0	16.0	16.0
Articles made of plastics	37.5	35.0	-	-
Rubber components	40.0	35.0	-	-
Project imports
Fertilisers	5.5 + 10 CVD	5.0 + 10 CVD	-	-
Refining of crude petroleum	5.5 + 10 CVD	5.0 + 10 CVD	-	-
Coal mining	5.5 + 16 CVD	5.0 + 16 CVD	-	-
Captive power plants of 5 MW and above	27.5 + 16 CVD	25.0 + 16 CVD	-	-
Power generation project (excluding captive power plants)	5.5 + 16 CVD	5.0 + 16 CVD	-	-
Power transmission projects of 66 KV and above	27.5 + 16 CVD	25.0 + 16 CVD	-	-
Other industrial plants or projects, including oil and gas	27.5 + 16 CVD	25.0 + 16 CVD	-	-

CVD:Countervailing duty

Source: CRIS INFAC

• Demand for capital goods has slowed down significantly, due to low capacity additions in the key sectors, such as power, and a decline in industrial investments.
• Margins of domestic electrical equipment manufacturers have declined significantly, due to competition from low-priced imports, imports under duty free schemes (such as EPCG), and low import duties on certain categories of projects (such as fertilisers and power).

Other capital goods: Budget impact

Impact factors

Company name	Impact	Impact factors
ABB	Neut	A, B, C
(316.95, 315.90)
Alfa Laval	Neut	B, C
(149.80, 151.20)
Alstom	Neut	A, B, C
(21.50, 23.15)
BEML	Pos	A, B, C
(28.65, 27.75)
BHEL	Neut	A, B, C
(164.95, 161.85)
Flat Products	Neut	A, B, C
(20.00, 20.60)
Jyoti Structures	Pos	A, B, C
(33.90, 33.25)
KEC International	Pos	A, B, C
(16.60, 16.85)

Notes:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
Neut= neutral, Pos=positive

Source: CRIS INFAC

A: The reduction in the customs duty on capital goods (due to the removal of surcharge), is expected to have a marginally negative impact on producers. Domestic producers are expected to face increased competition from project imports, largely in the power sector. The expected growth in construction activity due to increased outlay for the National Highway Development Programme (NHDP) is expected to have a positive impact on construction equipment manufacturers, such as BEML. Increased outlay for rural electrification, power transmission and distribution is likely to benefit manufacturers of transmission towers, such as KEC International and Jyoti Structures.

B: Reduction in the customs duty on raw materials such as steel and non-ferrous metals, is expected to have a marginally positive impact on producers.

C: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

Tell us what you think of this analysis