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