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MAIT hails IT provisions in budget

The IT manufacturing industry has welcomed the new policies pertaining to the sector announced in this year’s union budget. It has hailed the policy on the manufacture of capital-intensive hardware products such as semi-conductors; and on the assembly, testing and packaging of semi-conductors, LCDs, storage devices and so on.

The budget has addressed the problem of inverted tariff structure in the industry by announcing a 12 percent excise duty/CVD on computers. With this, the 7 percent additional duty on computers will no longer be applicable.

Congratulating Union Finance Minister P Chidambaram, the Executive Director of MAIT, Vinnie Mehta said, “The industry is glad that tariff structure anomalies have been addressed. The imposition of 12 percent excise duty will establish a seamless CENVAT chain for computer manufacturers and facilitate local sourcing of components such as monitors, motherboards and keyboards, thus promoting indigenous manufacturing. It will also encourage the manufacture of high-end products such as notebooks and servers.”

He added that, “The introduction of the excise duty will have minimal impact on the prices of computers. They are expected to remain stable as the excise duty concession has been extended to DVD drives, flash drives and combo drives. Local manufacturers can now offset the excise duty on import of spares and the service tax on services consumed for manufacturing. In cases where there could be a marginal price increase it could be neutralised. The rate of obsolescence in the industry is high, and prices will stabilise in due course.”

The introduction of 16 percent excise duty on set-top boxes not covered in the scope of the IT Agreement list, and a simultaneous reduction in their customs duty will help indigenous manufacturing, according to MAIT.