According to several reports, the central government is planning to impose a 5 per cent import duty on power generation equipment.

Under the present rules, power generation equipment that are imported for projects of less than 1,000 MW capacity attract an customs duty of 5 per cent. Equipment imported for larget projects are exempt from the taxation.

Following the reports of the import duty on import of equipment, the shares of the likes of L&T, BHEL, ABB gained on Thursday. The shares of Bharat Heavy Electricals (BHEL) rose 2.51 per cent and were trading at Rs 220.40. A B B gained1.98%, to trade at Rs 797.10 while Larsen & Toubro (L&T) shares increased 1.02 per cent and were trading at Rs 1,355.50 at the this of reporting this morning.

The Prime Minister's Office has already asked power ministry to circulate a cabinet note on the issue of import duty on power equipment. If cleared, it will be a major boost to the domestic equipment manufacturers, who were facing tough competition from cheaper equipments from China.

The BSE Capital Goods index recorded an increase of 1 per cent compared to 64 points or 0.4% fall in the benchmark Sensex.