Business
IT industry seeks duty removal to ease component imports
New Delhi, Jan 27
The Indian information
technology (IT) industry is to seek the government's help to do away
with the four percent duty on imported electronics components as that is
becoming counter-productive.
"We want to recommend to the
government removal of Special Additional Duty (SAD) of four percent on
all electronics components that are imported to the country. Importing
finished products is becoming cheaper than importing components," Anwar
Shirpurwala, executive director, Manufacturers' Association of
Information Technology (MAIT), told IANS.
MAIT is the apex body of India's IT hardware industry.
Removing
SAD "will address the inverted duty structure, place a domestic
manufacturer on a par with a trader from a customs duty cost
perspective, create a level playing field and thereby encourage
manufacture of ITA (Information Technology Agreement) goods in India,"
said MAIT in its budget recommendations, a copy of which is with IANS.
The World Trade Organization (WTO)-led ITA guarantees zero-tariff and duty-free trade in hundreds of products.
The
ministry of IT & Communications estimates that India's demand for
IT hardware & electronics is expected to touch $400 billion by 2020.
With the current rate and base of domestic production, an expected $320
billion worth of IT hardware & electronics is expected to be
imported into India to cater to the burgeoning demand.
India
almost imports all its electronics consumption. In 2014, almost $12.5
billion worth of hardware was consumed here. Manufacturing only caters
to about 5-10 percent of the total consumption.
The industry is
hopeful about the three flagship programmes announced by Prime Minister
Narendra Modi - Digital India, Make in India and Smart Cities.
The
association is also looking at certain incentives for ITA-bound goods
that will potentially encourage their domestic manufacture, result in
import substitution and effectively reduce the tax burden on ITA goods.
Shirpurwala
mentioned that India has huge opportunity for manufacturing. "Domestic
as well as foreign players are interested in setting up manufacturing
units in India," he added.
The recommendations focus on ease of doing business as well.
"Speedy
disposal as well as modification of norms for Customs Special Valuation
Branch (SVB) proceedings is imperative. The current process of
obtaining an SVB order is fraught with delays. SVB proceedings should be
dispensed with or at least fast-tracked for all zero duty imports," he
added.
It has also been suggested that the central government
come out with the draft goods and services tax (GST) legislation at the
earliest for understanding, discussing and eliciting the views of
business and trade.
The industry stakeholders also highlighted that the government needs to reduce the time for customs clearances.
"The
average customs clearance time in India ranges between three to four
days, which is much higher than the time taken in countries like
Malaysia and China (where the time taken is less than eight hours owing
to a green channel)," MAIT stated.
(Aparajita Gupta can be contacted at [email protected])