Assocham seeks duty rationalisation for IT industry

NEW DELHI: In a bid to provide a filip to domestic manufacturing, industry association Assocham has sought rationalisation of overall duty structure for electronics hardware and IT industry to 12% from the existing levies of about 30%.

The chamber, in a letter to the Prime Minister, has also called for creation of a separate Ministry for Electronics to look into the various issues impeding the manufacturing sector, and said that the domestic industry was ready to pump in Rs 40,000 crore in electronics hardware, which could in-turn create 26.8 million job opportunities over the next five years.

"At present, duties and levies work out to about 30% including 12% VAT, 8% excise duty, 4% GST and other levies. This should be brought to 12%. In addition, the Government should abolish central sales tax and create a level playing field for the benefit of domestic manufacturers," Assocham Electronics and Computer Committee Chairman P K Sandell said at a conference.

He said the inadvertent duty structure of electronics and IT industry was making locally manufactured products costlier than their imported counterpart, and cited the examples of CPTs and Set Top Boxes (STBs) as products that are cheaper to import.

"WTO stipulations have ensured elimination of duties (in case of 217 items under ITA) and the Indian industry has been thrown into free competition with global giants who have decades of R&D strength and technological superiority. Our indegenious industry in the post-WTO duty free regime is witnessing closure of the SME sector manufacturing," he said.

Mr Sandell also pointed out that India had entered into FTA agreement with Thailand and Singapore, giving these potential IT rivals import duty concessions while local manufacturing had become uncompetitive due to inverted duty structure.

"As a result of the prevailing fiscal deficiencies, the most damaging effect on the indigenous manufacturing in the zero duty regime is that higher the value addition in manufacturing, the greater is the disability because of the increasing tax burden," he said. Local manufacturers had to bear the burden of paying excise duty on end customer realisable price, which included transactional expenses, while in case of imported goods, CVD was paid on the import price, he pointed out.