MAIT pins hope on EXIM policy; recommends SEZs

In its first post budget address, MAIT, the body representing the hardware, training and services sectors of the IT industry in the country, shared the details of the implications of the recently announced Union Budget on the Indian IT industry and also the IT Industry's expectations from the forthcoming EXIM Policy.

Elaborating the details of the Budget, Vinay Deshpande, President, MAIT said "There is no room for price reduction for any IT products manufactured in India--be it by domestic players or MNCs." 

Due to removal of surcharge on the basic customs duty, the scope of price reduction for high-end finished goods imports like Servers and Notebooks, is a meager 1.3- percent. MAIT has been asking for reduction in excise duty to eight percent from existing 16 percent for almost three years. However the mood in the Ministry is to move towards a VAT in next couple of years with a single rate of 16 percent, Deshpande added.

The IT hardware and manufacturing sectors have been looking forward to policy measures from the government to enable the sustainable manufacturing in the IT sector and reduction in prices of IT products for increased penetration.

Speaking on the issue of hardware manufacturing, Deshpande said that the most feasible solution under the current circumstances would be to create Special Economic Zones (SEZs) for the hardware sector and the Electronic Hardware Technology Park (EHTP) scheme with necessary modifications. 

Commenting on his expectations of the EXIM Policy Vinnie Mehta, Director, MAIT said "The Ministry of Commerce has been very supportive of the MAIT recommendations and we are expecting a favorable EXIM Policy." 

Setting up of SEZs for hardware and modification of EHTP are the key expectations from the forthcoming EXIM Policy. The EXIM Policy is also expected to focus on modification of Labor Laws, encouraging R&D for global market, focus on non-IT Hardware: Security Electronics, Electronic toys, Intelligent manufacturing, automotive electronics, he maintained. 

"MAIT has recommended that the condition for compliance with Net Foreign Exchange Positive (NFEP) condition in the SEZs and the EHTP be removed. This would accord the necessary flexibility to the entrepreneurs to decide the markets in which they would wish to sell. Further, we have also recommended that the facility of concessional access to the domestic market be withdrawn which means that the industry will have to pay the full rate of customs duty and all other local levies when finished products are sold in the domestic market," added Mehta.