• IEEMA as a voice of Indian electrical industry plays a crucial policy advocacy role with central and state government and its agencies. IEEMA is invited by various central and state ministries, central PSU’s, State Utilities to provide its inputs and to play an increasing role as a “Partner of Choice” in policy formulation.

Some recent representations made by IEEMA are as follows:
  • Request to Incorporate and Consistent use Price Variation Clauses in Existing as well as Future Contracts 
On 5th March 2021, IEEMA represented this matter to the Coal India Limited and The Singareni Collieries Company Ltd. IEEMA mentioned that uniform price variation in contracts is a well-accepted and trusted principle, practiced over four decades by all large public sector procurement agencies like PGCIL, NTPC, Railways etc., as well as, for major projects in transmission and distribution tendered by State Utilities. Prices of input raw material always move erratically depending upon the market fluctuations, geopolitical issues, government policies etc. The supplier quoting on the basis of firm price for a short-term contracts faces considerable difficulty while bidding since it has to predict the future variation in raw materials and quote accordingly. In such a scenario, the supplier either grossly over quotes to be on the safer side or gambles and under quotes in a highly competitive market. In both the above cases there is a disadvantage in some respect to both the suppliers and purchasers. As against this, if the purchaser provides price variation clause even for a shorter period, the supplier is not required to speculate on the prices of inputs and therefore bases its quotation on the ruling prices of inputs at the time of quoting. This eliminates not only the speculation and pseudo pricing, but also provide reasonably fair price variation to either purchaser or the supplier, as well as, it helps the supplier to maintain a proper delivery schedule. For most of the electrical equipment used in power transmission and distribution, the total delivery period from the date of quotation varies from 3 months to 3 years. Therefore, all these contracts are ideally to be covered for procurement using price variation clause. In view of the above, IEEMA requested the Coal India Limited and The Singareni Collieries Co. Ltd. to issue directives for incorporation and consistent use of Price Variation Clauses, in existing as well as future contracts, to safeguard the interests of both buyer and supplier.
  • Request to the State Government of Assam and Uttar Pradesh to Issue Orders for Reduction in Value of Performance Security from 5-10% to 3% in Existing and Future Government Tenders
In its representation on 5th February 2021, IEEMA brought to the notice of these State Governments, about the announcement of Aatmnirbhar Bharat 3.0 on 12th November 2020, that included reduction in value of performance security in Government tenders from existing 5-10% to 3% of the value of the contract, which is applicable for all kinds of procurement viz. Goods, Consultancy, Works, non-consulting Services, EPC etc. and are issued under Rule 6(1) of the GFRs 2017. IEEMA mentioned that the Government of Rajasthan, the Government of Jammu & Kashmir and the Government of Haryana had already issued their Orders in this regard. IEEMA requested the State Governments of Assam and Uttar Pradesh to issue similar Orders to their Power Utilities and Government Departments for reduction in value of performance security from 5-10% to 3% in existing and future Government tenders.
  • Request to Implement Advisories of the Government of India, under Aatmnirbhar Bharat to Provide Relief to the Indian Electrical Industry
On 1st February 2021, IEEMA represented to all State power utilities to implement all the benefits provided by the Department of Expenditure, Ministry of Finance, Government of India in their existing and future procurement tenders. These benefits included the following: (a) Reduction in Value of Performance Security on Government Tenders from existing 5-10% to 3% of the Value in Existing and Future Contracts (b) Replacement of Bid Security / Earnest Money Deposit (EMD) with Bid Security Declaration in Existing and Future Contracts (c) Return of Performance Securities Proportional to Supplies Made / Works Contracts Concluded in Existing and Future Contracts IEEMA mentioned that the said measures would provide significant relief to the contractors and suppliers, easing their liquidity and working capital needs and help them tied over the difficult situation created by the pandemic and subsequent crisis.
  • Request for Reduction in Period of Performance Bank Guarantee
On 19th January 2021, IEEMA represented to Madhya Pradesh Power Transmission Company Ltd. on this matter. IEEMA was informed by Insulator manufacturing members about a particular tender Notification which required Performance Guarantee Period of 18 Months, from date of Last Supply and additional 18 Month for Rectification Period, which with announced amendments vide II & III, dated 4th January 2021 and 14th January 2021, is extended to 60 Months, from date of Last Supply and 24 Month for Rectification Period. It was submitted that this will add additional burden to the ailing Insulator Manufacturers who have been affected heavily by the Pandemic and are under financial difficulties. IEEMA requested to keep the required Performance Guarantee for the Period of 18 months from the date of last supply and additional 18 Month for Rectification Period as mentioned in the tender notification, which will provide significant relief to the manufacturers, easing their liquidity and working capital needs and help them tied over the difficult situation created by the pandemic and subsequent crisis.
  • Clarification on applicability of GST Rate on Solar PV Power Projects on or before 1st January 2019 – Notification no. 24/2018, dated 31st December 2018
Some IEEMA members engaged in Solar PV power projects, reported an ambiguity in applicable rate of GST in the contract of Andhra Pradesh Power Generation Corporation Limited (APGENCO), for supply, erection and Operations & Maintenance of Solar PV Power Projects, executed between 1st July 2017 and 31st December 2018, as to the effectiveness of notification no. 24/2018, dated 31st December 2018, for the said period. These Contracts were entered in pre-GST regime and after the implementation of GST on 1st July 2017, there was a confusion that whether the composite works contract for the Solar Projects would be taxed at 18% or 5% of GST. Members informed that APGENCO, in consultation with its tax advisor, decided to charge GST at 5%, with an assurance that any additional liability would be borne / reimbursed by APGENCO. Meanwhile, the Department of Revenue, Ministry of Finance, Government of India, issued notification no. 24/2018-Central Tax (Rate), dated 31st December 2018 (copy attached), inserting an explanation under sl. no. (vii), that GST on supply of solar power generating system shall be calculated considering 70% of the project value as supply of goods to be chargeable at 5% GST and balance 30% shall be considered as supply of services to be chargeable at 18% GST, with the effective rate of 8.9% GST on all these contracts. We are also attaching copies of GST Press Release, dated 22nd December 2018 and Notification no. 27/2018 – Central Tax (Rate), dated 31st December 2018. In accordance to this notification, APGENCO amended its contracts, with a revised rate of 8.9% of the contract value and paid the differential percentage of GST, that is, 8.9% – 5% = 3.9% to the contractors. However subsequently, APGENCO, in consultation with another tax advisor, considering applicability of aforesaid notification from retrospective effect, that is, after 31st December 2018, has claimed return of the differential percentage of 3.9% GST paid to the contractors, by invocation of their bank guarantees. In its representation on 1st February 2021, IEEMA submitted that the bank guarantee sent for invocation is primarily given for the performance of the contract. Any encashment of same other than this, that is, to settle an unresolved GST rate applicability is arbitrary. Further, the said notification is intended to be from retrospective effect, instead of prospective effect, and hence to be valid for the entire duration of the contract, from the implementation of GST, i.e. from 1st July 2017.
  • Reduction in Value of Performance Security in Government Tenders from existing 5-10% to 3% of the value of the contract – Request for Kind Intervention
In its representation to the Ministry of Power, Power Finance Corporation and Rural Electrification Corporation, on 11th January 2021, IEEMA submitted that to meet up the challenges faced by Industry, the Government of India, had from time to time announced some relief measures, especially for those companies/ industry which are involved in Government business. This includes reduction in Value of Performance Security in Government Tenders from existing 5-10% to 3% of the value of the contract, vide Office Memorandum No. F.9/4/2020-PPD, dated 12th November 2020, issued by Department of Expenditure, Ministry of Finance, Government of India. Many organisations have implemented this reduction in percentage of performance security, by issuing their respective Orders in this regard. However, many State Governments and its utilities are yet to issue their respective Orders in this regard. Hence, the suppliers / contractors are not getting the intended relief measures, i.e. reduction in percentage of performance security to 3%, which was provided by the Government of India. IEEMA requested the Ministry of Power to intervene in this matter and advise the Government Departments of States and Union Territories and to the State Power Utilities, to also implement reduction in percentage of performance security to 3%, by issuing their own orders in line with aforesaid OM No. F.9/4/2020-PPD, dated 12th November 2020, issued by Department of Expenditure, Ministry of Finance, Government of India. Further, IEEMA also requested the utilities to re-work on Contract Delivery Period and extend the delivery schedule, against the contracts / Orders in hand and no penalties should be imposed till there is an impact of Covid -19 in running of businesses. It was also submitted that the Covid-19 lock down period should not be considered as delivery period and delivery extension should happen for all contracts, for at least 6 months, excluding the lock down period, along with extension of the price variation contracts till the extended delivery period.
  • Request to Issue Office Memorandum for Reduction in Value of Performance Security from 5-10% to 3%  
On 8th January 2021, IEEMA represented to Maharashtra State Electricity Distribution Co. Ltd. in this matter. IEEMA submitted that the Department of Expenditure, Ministry of Finance, Government of India, issued an Office Memorandum, vide no. F. 9/4/2020-PPD, dated 12th November, 2020, advised to reduce the Performance Security from existing 5 -10% to 3% of the value of the contract pertaining to all existing contractors tenders / contracts issued / concluded upto 31.12.2021, thus making it applicable for all kinds of procurement viz. Goods, Consultancy, Works, non-consulting Services, EPC etc. and are issued under Rule 6(1) of the GFRs 2017. IEEMA requested MSEDCL to implement reduction in percentage of performance security to 3% by issuing similar directives, in compliance to the OM of the Department of Expenditure, Ministry of Finance, Government of India. The above measures will provide significant relief to the contractors and suppliers, easing their liquidity and working capital needs and help them tied over the difficult situation created by the pandemic and subsequent crisis.
  • Representation on Steep Rise of Basic Raw Material Prices
 The Indian electrical industry has been facing severe hardships due to unusual rise in the prices of its basic raw materials, such as, Steel, Aluminium, Copper, Zinc, Polymer etc. in the range of 15-35%, which are critical inputs in the manufacturing of electrical equipment. A large portion of IEEMA membership falls under micro, small and medium enterprises which are unable to sustain the impact of this crisis. On 1st January 2021, IEEMA represented this matter to Prime Minister’s Office, Ministry of Power, Ministry of MNRE and Department of Expenditure etc. It was submitted that the Covid lockdown period impacted deliveries/ execution schedule of many contracts, many of which are fixed price contracts. The association recommended that to provide immediate relief to the suppliers: (a) The lockdown period should not be considered as delivery period and delivery extension should happen for all contracts, for at least 6 months, excluding the lock down period. (b) Extend the price variation contracts, till the extended delivery period.
  • IEEMA Representation on Denial of Emergency Credit Line Guarantee (ECLG) Scheme under Aatmnirbhar Bharat Package
The ECLG (Scheme) 2.0 was launched to cover 26 stressed sectors (power sector included), identified by Kamath Committee, with credit outstanding of above Rs. 50 crore and up to Rs. 500 Crore, as on 29.2.2020. However, the manufacturers of Power, Distribution Transformers and Reactors had been denied this benefit by nationalized banks on the ground that these Companies are not directly engaged in generation, transmission or distribution of power and the company’s industry classification falls under ‘Electrical Equipment’ Industry / Sector, within sub-segment of ‘Power Transmission and Distribution Equipment’. On 1st January 2021, IEEMA requested the Ministry of Finance to issue appropriate clarification to the Banks and Financial institutions on applicability of this Scheme which is intended to provide liquidity support to the manufacturing sector.
  • Request for Clarification on Order of the Ministry of Power, dated 2nd July 2020
 To protect the security, integrity and reliability of the critical power supply system and its network in the country, the Ministry of Power had issued an Order, dated 2nd July 2020, stipulating some conditions on imports of equipment from prior referral countries, sharing land borders with India. These conditions include prior permission of the Government of India and testing of these equipment in designated Indian laboratories. In its representation to the Ministry of Power on 1st January 2021, Government of India, IEEMA sought certain clarification that whether the testing needs to be done on the finished product or on all the components individually, and whether the testing shall be done in a lab or after installation of the imported product. In absence of the above clarity, the State utilities are insisting upon the suppliers to provide test certificates or undertakings to this effect. IEEMA also mentioned that equipment, sub-assemblies or components which are essentially devoid of any inbuilt electronic devices and associated software, do not have the capability for causing cyber-attacks.
  •  Request to Implement Relief Measures Provided by the Government of India
On 4th January 2021, in its representation to the respective State Governments and the Union Territories, CPSUs, State Owned Utilities, PFC, REC, Ministry of Power etc. IEEMA mentioned that the pandemic had brought many challenges for the industry. Keeping in mind the importance of manufacturing sector, the Government of India announced some relief measures, from time to time, such as: • Declaration of ‘Disruption of Supply Chains Due to Spread of Corona Virus’ as a Force Majeure event. • Return of Performance Securities Proportional to Supplies Made / Works Contracts Concluded • Replacement of Bid Security / Earnest Money Deposit (EMD) with Bid Security Declaration • Reduction in Value of Performance Security in Government Tenders from existing 5-10% to 3% of the value of the contract IEEMA requested the State Governments and the Union Territories to issue orders to their Power Utilities and the Government Departments to follow the aforesaid relief measures provided by the Government of India. Further, IEEMA requested the utilities to re-work on Contract Delivery Period and extend the delivery schedule, against the contracts / Orders in hand and no penalties should be imposed till there is an impact of Covid -19 in running of businesses. It was also submitted that the Covid-19 lock down period should not be considered as delivery period and delivery extension should happen for all contracts, for at least 6 months, excluding the lock down period, along with extension of the price variation contracts, till the extended delivery period.
  • Request for immediate intervention for Rescheduling of Contractual Deliveries with IEEMA PVC and Waiver of Liquidated Damages/ Penalty in view of COVID 19 pandemic and lockdowns
On 3rd January 2021, IEEMA represented to all State Utilities. The Association submitted that the period of lockdown, during which manufacturing establishments had to be kept closed, needs to be treated as a Force Majeure Condition by all Utilities. Also the contractual delivery date, for all on-going contracts issued by all Utilities, should be extended based on the revised delivery schedule proposed by the OEM, mutually discussed and agreed between purchaser and supplier. Consequently, the delivery extensions shall be without imposition of Liquidated Damages/Penalty.
  •  Short Payment of GST to Suppliers by WBSEDCL
On 1st January 2021, IEEMA represented the matter of short payment of GST by the West Bengal State Electricity Distribution Company Limited (WBSEDCL), for supplies of cables and other goods, deviating from earlier mutually agreed contractual provisions. Just before the delivery of consignments GST was introduced, replacing earlier provisions of Central Sales Tax and Central Excise Duty. In view of the same, the utility issued amendments to its earlier purchase orders and agreed to pay GST. Meanwhile, the Government of West Bengal, issued a notification no. 5050-F (Y), dated 16.08.2017, on methodologies for release of payments under GST. Upon raising of bills, the suppliers received short payments of GST from WBSEDCL. The supplied materials were manufactured and inspections were done before the implementation of GST. Moreover, WBSEDCL had agreed to pay GST in its purchase orders, when it was implemented. IEEMA requested WBSEDCL to follow its own contractual commitments and not to deduct GST arbitrarily. It was requested to remit the differential amount of GST to the suppliers.
  • Denial of ECLG Scheme to Manufacturers of Electrical Equipment 
 The Emergency Credit Line Guarantee Scheme 2.0 was launched to cover 26 stressed sectors (including the power sector), identified by Kamath Committee. This was one of the relief measures announced by the Government of India, on 12th November 2020, under the Aatmnirbhar Bharat 3.0. The scheme covered credit outstanding of above Rs. 50 crore and up to Rs. 500 Crore, as on 29.2.2020. Some manufacturers of electrical equipment, including Transformers, Conductors, Cables and other items were denied the benefits of this scheme by the nationalized banks, with an interpretation that the applicants are not directly engaged in generation, transmission or distribution of power and these companies fall under the Electrical Equipment Industry / Sector, within sub-segment of Power Transmission and Distribution Equipment. On 1st January 2021, IEEMA represented the matter to the Department of Financial Services, Ministry of Finance, Government of India, and sought clarification on applicability of this Scheme, in order to ensure reaching out of its benefit to the manufacturing industry, as intended by the Government. Further, it is mentioned under point no. 19 of the Operational Guidelines that the status of the borrower’s account on the date of sanction / disbursement should not be NPA, to qualify for this Scheme. IEEMA submitted that this point is in contradiction and defeats the purpose of the scheme, since many accounts which have come under stress during the period of March 2020 onwards may have become irregular due to the lockdown and its consequences. Hence point no. 19 should be removed, so that all MSMEs get this financial support under the ECLGS scheme. Additionally the Supreme Court had ordered that status will be maintained for all those account which are standard, as on 30th August 2020, and no borrower account should be declared as NPA.                                                                                                                                                                                                            ……Read More