What I Couldn & #8217;T Tell The Fm

Run-Up To Budget 2003

With the Finance Minister deciding against holding pre-Budget meetings this year, we start a series on what leading businessmen, economists and politicians wanted to tell the minister, but couldn't do so:

Vinnie Mehta

EXECUTIVE DIRECTOR, MAIT

The domestic infotech market is back on the growth track, which has bolstered the confidence of the hardware industry.

However, there is still a long way to go before we become a globally competitive industry. China today is the factory of the world, and if we want to be competitive in manufacturing, our tax rates need to be at par with, if not better, than those in China.

There is only a 17 per cent value-added tax on infotech products in China, which may be revised to 14 per cent this year. The value-added tax on the high-tech sector is likely to be revised to 9 per cent.

To ensure that infotech reaches the grassroots level in India, there is a need to bring down the price of its products.

The Manufacturers Association of Information Technology (MAIT) has a single-point agenda for the forthcoming Budget--reduction in excise duty to 8 per cent (or 6 per cent if the government adopts the excise duty structure as recommended by the Kelkar committee) from 16 per cent at present, till the government introduces a composite value-added tax.

The government needs to urgently address the challenges of the inverted tariff structure arising out of the implications of the IT Agreement of the World Trade Organisation.

The government must ensure a Customs duty waiver on all capital goods for infotech, electronics, telecommunications manufacturing and raw materials, including dual usage items, as the finished products hit zero duty.

Sector-wise/Service tax

KELKAR SAYS

Abolish 10A, 10B fiscal benefits for exporters

Merge of Duty Entitlement Pass Book scheme with the drawback scheme from April 2005

TConsolidate notifications on Customs and excise for SEZ and EOU/EPZ schemes by April 2003

Involve department of commerce in setting drawback rates

CII SAYS:

Retain 10A and 10B for the full duration, enable restructuring and consolidation by doing away with Sub-Section 9

Continue with Duty Entitlement Pass Book scheme , restore earlier provision of net debiting special additional duty under the DEPB scheme

Amend Customs notification 110/95 with retrospective effect for extending export obligation period up to March 31, 2004, under the Export Promotion Capital Goods scheme

FICCI SAYS:

Phase out peak duty, prioritise raw materials and not finished goods

Special additional duty exemption for inputs not produced in India, but essentially for domestic industry

Reimburse or exempt from central sales tax inputs supplied to the domestic industry under the deemed export route

Introduce self-assessment of bills of entry for imported goods and collection of Customs duty on self-assessment basis