MAIT recommendations for Budget

New Delhi: Manufacturers' Association for Information Technology (MAIT) in a memorandum submitted to the Union Finance Minister on June 2, 2009, has stressed the need for a stable policy regime for the IT hardware industry and for growth-oriented measures to boost domestic IT consumption.

In a pre-budget analysis of the industry and the economy, Vinnie Mehta, Executive Director, MAIT commented, “The monetary and fiscal measures announced by the government in the recent past have been able to instill confidence in the industry to an extent. With lower than expected consumption of IT products in the financial year 2008-09 owing to the economic slowdown, we now hope for a long-term growth-oriented policy.”

Mehta continued, “MAIT members have unanimously and repeatedly emphasized that a long- term, holistic fiscal policy framework is needed to encourage deepening of manufacturing and to give a much needed fillip to the IT hardware industry in India. Continuation of the existing eight percent excise duty/CVD on all IT products, across the value-chain, should, therefore, be seen in this light. Further, providing appropriate incentives for IT manufacturers-finished products and components in India, as in the case of semiconductors, would have a positive impact on IT manufacturing investments.”

Elaborating on the recommendations, Mehta added, “As technology-computers and broadband combined, is today considered a strategic differentiator for any economy, it is essential to roll out mission mode IT projects in sectors such as education, SMEs, households, e-governance, telemedicine and for rural India. These will go a long way in contributing to our national goal of 'inclusive development'.”

Key recommendations:

Continuation of eight percent excise duty/CVD on all IT products-computers, peripherals and components. Currently, the service tax is pegged at 10 percent while the rate of excise duty/CVD is eight percent

The four percent Special Additional Duty (SAD), should be abolished on all IT products and components. SAD was introduced on imports to balance the impact of local taxes on domestic-manufactured products.

The excise duty/CVD on IT products such as notebooks, printers, set-top boxes, etc has been levied on the MRP since Jan 2005. It is recommended that the rate of abatement be enhanced to 35 percent, to be at par with similar consumer durables