Hardware’s Day In The Sun



Things seem to be happening in quick succession for hardware! It was in these
columns of the previous issue we had advocated the need for rationalizing
customs and excise duties to create a conducive environment for manufacturing.

Now comes the news that the finance minister Yashwant Sinha has promised
relief on all issues relating to duties and taxation on hardware, either
immediately or in the next budget. This should come as sweet music to the ears
of hardware manufacturers.

That the finance minister’s decision came after his two-hour long meeting
with the IT minister Pramod Mahajan and an IT industry delegation speaks for the
initiative taken by the IT minister to promote hardware manufacturing in the
country.

In fact, after giving full backing to the establishment of a task force that
will ensure the implementation of ‘Hardware Vision 2005’, now the support that
the IT minister has given to hardware to present its problems to the finance
minister shows that Pramod Mahajan is serious about his intentions of giving a
fillip to this particular segment.

Backed by Mahajan, Wipro chairman Azim Premji, whom we had put on the cover
when he made news lamenting over the poor state of infrastructure in the
country, made an effective presentation to the finance minister highlighting
what the government should do to revive hardware manufacturing.

Premji’s presentation did have its impact and the finance minister, based on
the facts presented, took on-the-spot decisions to simplify procedures which
would go a long way in facilitating the growth of hardware.

The growth of hardware will also happen because the finance minister is keen
that the government increases its spending on IT. He intends to to put pressure
on his cabinet colleagues to develop a mechanism by which they will spend three
percent of their total budgets on IT.

If the finance minister succeeds in his efforts, hardware vendors will have a
bonanza coming their way. If government departments start spending on
procurement of IT in a big way at a time when there are signs of recession in
the industry, vendors will have a lot to cheer about.

One thorny issue that the government faces is how to bring down the import
duty of chemicals, petrochemicals and metals used by hardware manufacturers to
zero as demanded by them when these items are also used by other industries. But
the finance minister is optimistic of resolving the issue by speaking to his
counterparts in other ministries.

Hardware manufacturers and importers found customs clearance a major
bottleneck because there was no round the clock clearance. This is being taken
care of with three sea ports at Mumbai, Chennai and Kolkata, and four airports
at Bangalore, Hyderabad, Delhi and Goa clearing goods in two shifts during week
days and one shift on holidays.

All in all, these initiatives and reforms have come at the right juncture
when the economy is sending out negative signals. Both Pramod Mahajan and
Yashwant Sinha deserve kudos for their foresight and the efforts they have taken
to lift the morale of the IT industry.

sylvesterl@cmil.com

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