The information technology (IT) multinationals operating in India has accused the Prime Minister's IT task force of protecting the interest of domestic computer companies' by suggesting "widening of tariff differntial between international brand imports and locally assembled PC products."
Ravi Marwaha, chairman of American Business Council (ABC)'s IT committee and country head of IBM, in a letter to the PMO has said, "An across the board widening of diffrential in favour of locally assembled products is simply not warranted and serves no policy purpose." ABC represents the interests of American companies doing business in India.
But the Task Force's convenor, S V Seshagiri, termed Marwaha's letter as an exercise in making "India into a purely importing nation and talking in a tone which suggests India is a slave economy."
"Why have they (IT MNCs)singled out only India, a country with over a billion population, for imports unlike China? They want India to get reduced to a pure importing country for another decade which has no logic," Seshagiri told Business Standard yesterday. Hewlett-Packard, for example, has made an investment of about $ 200 million in China, while Motoral has pumped in $ 1.2 billion in IT area.
Marwaha's letter _- written to Sudheendra Kulkarni, director in the PMO and a member of the task Force _- has pointed out that the Task Force is seeking to lower the tariff on imported components and subsystems to zero with immediate effect, while leaving untouched the duty on international brand imports until 2003.
"The current differntial is 25% average versus 38 per cent average, while the new (duties) would be zero per cent versus 38 per cent average, "the letter sates, adding, "There is no rationale for incenting (rpt INCENTING) local IT assembly of mostly imported constituents for its own sake.Moreover, its effect on our business and of those similalry situated will be drastic and lasting."
Marwaha's letter goes on to further state that the IT Task Force hardware sub-committee appears to suggest the widening tariff diffrentials which would redraw market landscape.
"It (tariff suggestions of the Task Force) merely redraws the market landscape and skews consumer choice more sharply against international brand imports than is now the case.
