IT hardware sector seeks more sops

By Our Special Correspondent

NEW DELHI, MARCH 18. The Government and the industry have locked horns on what is good for the hardware sector. While the Government feels enough has been done to promote IT manufacturing in the country, the industry is of the opinion that not enough has been done.

Unsettled over the lukewarm response of the hardware industry to the budget, the Government maintains that adequate attention has been paid to this segment in the ``Year of the hardware sector''. Officials sources point out that a feeling of being let down by the Government is misplaced. The budget contains several proposals aimed at providing a boost to this sector.

These steps supplement several other measures taken outside the budget to improve the hardware sector's appeal to the industry.

In fact, the Government counters criticism about unpreparedness on the WTO front by pointing out that the customs duty on certain IT and telecom products has been reduced precisely for this reason.

While the industry is crying foul over duty cuts that have narrowed the differential between some imported parts and finished goods, officials point out that this was done in view of India's commitment to conforming with the tariff levels under the Information Technology Agreement (ITA-I) of the WTO (IT and telecom products).The Government had also taken several non- budgetary measures to improve the investment potential in the hardware industry.

Export promotion capital goods scheme has been rationalised, FDI approvals except for B2C e-commerce are under the automatic route, powers of approval of Ministry of Information Technology officials has been further enhanced to $20 millions and depreciation norms have been further relaxed.

However, the industry remains unconvinced and feels a lot of ground remains to be covered before the Government can safely say that it has accounted for the concerns related to the IT agreement of WTO under which the entire sector will hit the zero duty regime in 2003.

For instance while the Indian IT industry will be a zero duty industry by 2003, non-input components like plastic parts, metal parts, chemicals and the like will not be zero duty. This would make IT manufacturing unviable, contends the industry.

The industry is now pinning its hopes on the forthcoming Exim Policy for a further round of concessions.

These include modification of labour laws, encouraging R & D for the global market and focus on the equally important non-IT hardware such as security electronics, electronic toys, intelligent manufacturing and automotive electronics.

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Section  : Business
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