Give IT hardware a boost: CII

New Delhi: The Confederation of Indian Industry (CII) has pointed out that India cannot aspire to be the IT superpower she wishes to be unless the hardware industry is given all the support it needs.

As a measure to provide a boost to the IT hardware sector, the CII has suggested that the depreciation rates of the IT hardware sector that is currently fixed at 60 percent be increased to 100 per cent for the next financial year.

As far as the indirect taxes are concerned, CII has suggested that the excise duty on IT and IT-related products should be reduced from 16 per cent to 8 per cent. The reduction of excise duty on all products will help in combating the grey market, reducing price and give boost to demand, according to the confederation.

Electronic and IT hardware sector, CII has reiterated, requires a conducive manufacturing environment. For a vibrant indigenous manufacturing base of IT hardware, it is necessary that customs duty on non-IT inputs used in IT should also be reduced to correct inverted tariff structure.

The confederation has also urged the government to allow all capital goods, which do not have an indigenous angle, for the manufacture of IT and electronic components at nil customs duty. At present only 68 items of specified machinery and parts of machinery required for manufacture of semiconductors is exempted from customs duty.

CII has also stressed that the customs duty reduction on IT hardware items should be as per original schedule of IT Agreement, which India joined in 1997, and should not be advanced from 2005 to 2003 as this could affect the indigenous hardware industry.

According to the agreement, the customs tariff on IT items is to be brought down to zero. India has committed to bring down the tariffs on 217 bound items, out of which 95 lines are to be reduced to 0 per cent by 2000, four lines in 2003, two lines in 2004 and the balance 116 lines in 2005. However, the finance ministry has been indicating that the schedule will be advanced to 2003.

The importance of IT in the knowledge age need not be over emphasised since it will be the sole driver of productivity and will make an increasing contribution to the growth of Indias domestic productivity, thereby contributing in a greater measure to the gross domestic product.

India has the potential to become an IT superpower if the right environment is provided. The government has also been taking several initiatives to encourage this sector. However, while the Indian IT industry has progressed considerably, it is yet to achieve its full potential.