The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested correction of duty structure for electronics hardware and IT industry so that it is reduced to 12% from present 30% to encourage their domestic manufacturing.
In an SOS to Deputy Chairman of Planning Commission, the Secretary General of ASSOCHAM, D S Rawat, pointed out that indigenous manufacturers can pour in about Rs.60,000 crore of investments to make electronics hardware and other products in case the inadvertent duty structure is corrected. This will generate over 25 million employment.
The inadvertent duty structure for electronics hardware and IT industry consist of 12% VAT, in most of cases 8% excise, 4% Goods and Service Tax and 2% Central Sales Tax.
In addition, there are other local levies imposed on electronics products and hardware which in totality subjects this industry to 30% taxation. This needs to be straightway brought down to 12%, said Mr. Rawat.
The ASSOCHAM SOS has warned that in next three years, i.e. by 2011-12, India would need 250 million units of mobile telephones and lakhs of computers and laptops, amounting worth Rs.20,000 crore.
In this, the import inputs component is expected to be more than 90% and local component a merely 10% until the existing inadvertent duty structure is not set right and brought down to at least 10-12%. With 90% imports, domestic employment opportunities to an extent of over 25 million are lost, according to the ASSOCHAM estimates.
Therefore, the remedy lies in setting up of a separate Ministry for Electronics so that policy measures are recommended to give a face lift to entire electronics and hardware industry. Electronics and IT being part of Telecommunication Ministry, it is unlikely that electronics will receive the attention of policy makers that it requires and it is one of the reason that not much of value addition is taking place by domestic manufacturers and India’s dependence on electronics and IT imports are increasing.
Source: ASSOCHAM
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