Total Fixed Capital Expenses Quite often the total fixed capital expenses are taken as the sum aggregate of costs of purchased assets and the costs of erecting them.

Sound economic fundamentals demand that each element of investment must be accounted for against the project in consideration.

1 Basic Equipment Cost

Basic equipment cost is the purchase cost of hardware based on data either from previously executed project cost or fresh budgetary quotations with necessary adjustments, wherever necessary, in order to retain the estimate on realistic footings. Budgetary quotes have been found normally padded to the extent of 20%. Sometimes it is possible to prune these costs during negotiations. This constitutes the basic cost of main equipment only with no strings like spares or duties and taxes or freight whatsoever attached to it. As far as this element of cost is concerned, utilities have huge data and information. The need is to organise it and put it in the form of a database to be handy.

2 Duties, Taxes and Freight

These comprise

- Excise duty: This is statutory on all indigenous procurement and is normally included by the supplier while giving the budgetary quotation. Nevertheless, it should be ensured through clarifications, if not clearly spelt out in the reference being used. The present applicable rate is @ 16% with 2% education cess aggregating to 16.32%.

- Customs duty: This is statutory and applicable in case of imported procurements. The rates for a particular item are available in the customs manual. Nevertheless, a blanket rate of 10% is applicable, considering the entire imports under “project import” category, if the import value is over Rs. 5.0 crores. For less than Rs. 5.0 crores, the applicable rate is 15%

-the peak rate of duty applicable as on date. On top of it, imported supplies are to be applied with countervailing duty (CVD), which