Hardware industry associations announce formation of a joint council

The four hardware associations of India-Consumers Electronics and TV Manufacturers Association (CETMA), Electronic Component Industries Association (ELCINA), Manufacturers Association for Information Technology (MAIT) and Telecom Equipment Manufacturers Association (TEMA)-have formed a joint council.

The Joint Council will comprise the President, the VP and the head of the Secretariat of each of the associations. The Council would meet periodically to jointly address the issues of the hardware industry to the Government and work towards a favourable policy regime for hardware manufacturing in the country. The joint council has presented the common recommendations of the hardware-manufacturing sector for the forthcoming Union Budget 2002-03.

The industry recommends that the government should take a holistic view of the entire situation. For the hardware manufacturing industry to remain competitive, the Government needs to implement the IT Agreement in 2005 as per India's commitment to the WTO. The industry will not be able to survive should the implementation be brought forward to 2003 as announced earlier by the government.

Further to rectify the inverted tariff structure, it is recommended that there be nil customs duty on all capital goods for IT, electronics and telecom manufacturing. Also there should be nil customs duty on all raw material inputs including dual usage items.

Speaking on the occasion, Vinnie Mehta, Director, MAIT said, "The hardware manufacturing in India is passing through a rough phase. With a policy structure not conducive to manufacturing, the hardware industry has witnessed erosion of the existing manufacturing base and disinterest of foreign investors in manufacturing in India. Interestingly, the global hardware manufacturing is a $ 1,000 billion opportunity and growing at eight percent per annum. With the right policy measures, India may well become a significant player in hardware manufacturing."

Pressing the need for a special sectoral treatment for the hardware sector, BS Sethia, President, ELCINA remarked that the hardware industry which includes electronics, IT and telecom in India is faced with the challenge of zero duty regime as per India's commitment to the IT Agreement of the
WTO.

"The IT Agreement pertains to only 217 electronic components and finished goods but capital goods and certain non-electronic raw materials do not fall within its purview. While the IT/Electronics Industry is in favour of a free and fair trade regime-the IT agreement would impact the industry adversely-should there be zero duty on the finished goods. Also while the inputs like raw materials, components including dual usage items and capital goods continue to attract import duty of 25 to 35 percent," concluded
Sethia.

The joint council has also suggested a special scheme for the hardware sector. According to the council, for purposes of ease of implementation of nil customs duty on capital goods and input raw materials including dual usage items, a special Domestic Tariff Area (DTA) scheme should be announced for the hardware sector. It is recommended that the scheme have the nil customs duty on all capital goods, nil customs duty on all input raw materials including dual usage items scheme.

The council also said that Ministry of Communication and Information Technology should be the nodal agency for implementation of the scheme.