To promote domestic electronics manufacturing, government today removed 4 per cent special additional duty on PC parts and imposed education cess on import of such products, but computer makers lamented absence of incentive for export of 'Made in India' IT products.
In his Budget speech, Finance Minister Arun Jaitley proposed removal of 4 per cent special additional duty (SAD) on PC components and imposition of education cess on imported electronic products to spur domestic manufacturing.
"I propose to fully exempt all goods, except populated printed circuit boards for use in manufacture of ITA bound items from SAD and reduce the SAD on imports of certain other inputs and raw materials subject to actual user condition," Jaitley added.
The government has proposed to impose basic customs duty at 10 per cent on specified telecom products that are outside the purview of the Information Technology Agreement (ITA).
Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Manish Sharma said introduction of the much awaited GST from next year, which is aimed at rejuvenating the industry, will mitigate cascading and double taxation in a major way and pave the way for a common national market, making manufacturing more competitive.
"Phased reduction in Corporate Tax, reduction of basic customs duty on 22 items and a reduction in tax on Royalty will encourage indigenous manufacturing and technology proliferation thereby supporting the 'Make in India'" Sharma, who is also the MD of Panasonic India & South Asia, added.
Reacting to the Budget, MAIT President Amar Babu said: "It (Budget) disappoints as no initiatives have been taken to increase PC manufacturing and promote exports. In this budget, we might have missed an opportunity to drive 'Make in India' in computers."
MAIT is the apex body representing India's IT hardware, training and R&D services sectors.
Babu, who is also the Managing Director of Lenovo India, added that the capacity utilisation of existing facility could have been improved, if the right enabling structure for local PC manufacturing was in place.
The removal of customs duty on components and concessional structure of 2 per cent without CENVAT credit are positive steps to encourage tablet manufacturing in India, Babu said.
Hariom Rai, Co-Chairman of the Fast Track Task Force set up to focus on India's mobile phone manufacturing ecosystem, said laptops should also be included in the same category as mobiles and tablets so that entire segment of computing and communication can move together in harmony.
Research firm Gartner India Country Manager (Research) Partha Iyengar said the reducing the tax on R&D and innovation investments to 10 per cent is a very positive move, both from the point of view of facilitating technology transfer as well as encouraging companies to invest more in driving innovation.
