All IT goods likely to get domestic tariff area access

NEW DELHI: The revised Exim Policy for ’03-04 is likely to allow 100% domestic tariff area (DTA) access for all the 217 items covered under the Information Technology Agreement of the WTO. If this happens PCs, printers and the entire range of telecom equipment which at present attract around 15% duty will get a boost in the domestic market.
Last year the government had modified the scheme but allowed DTA access only to those items which attract nil customs duty. While there are quite a few items in this category, only 4-5 items are manufactured here, like ICs, colour display tubes, chip capacitors and chip components.
The industry has been arguing that DTA access be extended to all items as they would come under nil duty regime by ’05. The two-year lead would help them get a headstart to compete in the global regime. Similarly, it wants DTA sales to be considered for computing the foreign exchange earnings over a five-year period.
Last year the government changed the annual computation to a five-year period, but again this was applicable only to the items that attracted nil customs duty. While the industry has got indications from both the department of information technology and the customs that 100% access would be allowed, it is afraid that the government while allowing 100% DTA access may choose to withdraw the 50% applicable duties for sales into DTA. The industry has therefore stressed that both should go hand in hand.
“With India’s disability factor estimated at 17-18%, this concession will help hardware and component manufacturing units neutralise the problem even in the face of nil customs duty on finished goods,� industry sources say.
Since a number of parts of the 217 ITA items are at nil customs duty, the industry is demanding a correction in the duty structure anomalies arising in the case of dual use items (for instance tuners used both in computers and TV). Even those companies which are not part of IT hardware and component should be allowed to avail the benefits of the EHTP scheme, it would only help encourage manufacturing, industry sources say.
Another important demand is that the government allow free import of second hand capital goods of any vintage for IT and electronics. At present if the equipment is older than 10 years, a licence is required. Also, second hand capital goods import is not allowed under the Export Promotion of Capital Goods scheme. As a result China is importing a lot of important goods from sophisticated plants elsewhere in the world.