|
Electronics and hardware industry is under great pressure and disadvantaged with the Government`s overdrive for liberalisation. Local manufacturers of ICT products and electronics components are facing the brunt of NIL import duty, due to the Information Technology Agreement (ITA-1) signed by the Government of India under WTO which came into force last March 2005.
In a press release, ELCINA Electronic Industries Association of India says that 217 lines of electronic products encompassing over 550 items have been made duty-free under ITA-1. According to the ELCINA President, Mr.RG Deshpande, these items which have a broad sweep in electronics and hardware can be imported duty free without any procedural hassles or conditions of any kind. This has placed local units at a tremendous disadvantage vis-à-vis imports, which attract only 4% Additional Customs Duty which can be set off against excise duty, while the 4% CST payable on interstate purchases of industrial inputs is not vatable. To make matters worse, implementation of VAT has increased the tax rate from 4% to 12.5% on a large percentage of these electronic items components and assemblies rendering local production even more uncompetitive.
Mr. Deshpande says it is ironic that everything is being done to encourage imports with complete disregard to the indigenous capacities that have been set up in the country with heavy investments. While imports have been made absolutely facile, with no holds barred, either physical or fiscal, local manufacturers have to contend with lengthy procedures while importing essential inputs required for manufacturing.
For instance, manufacturer importers require minimum 8-10 days to complete formalities for clearing consignments and bringing to their shop floor for use in production. Starting from registration with Excise department, the process involves declaring items, submitting consumption norms, furnishing a Bond and separate applications for each item and port. To top it all the unit has to file application separately for each port of import to cover the requirements for every 3 months.
This is tantamount to treating manufacturers with suspicion and with so many hassels which add to cost and delays, manufacturing remains a frustrating activity.
The ELCINA Secretary General, Mr Rajoo Goel regrets that representations are pouring in from members about the dumping of electronic components into the Indian market. We are told that components are being imported from China at prices which are less than their bill of material. ELCINA has been informed that glow switches and capacitors are being imported at US$2 per 1000 from China while the material cost of the same when manufactured locally is double at US$4 per 1000 !. This adds a new dimension to the problems being faced by the indigenous manufacturers.
Yet another disturbing aspect which threatens the survival of electronics hardware manufacturing is India entering into Free Trade Agreements with ASEAN countries. The FTA with Thailand has shown a sharp surge in imports of certain electronic products such as Colour Picture Tubes and Televisions. Data obtained from major ports shows that import of CPTs has more than doubled from Thailand after the implementation of FTA.
Local industry has invested almost Rs.3000 crores in CPT alone which is a critical product. This sector is facing severe hardship due to an adverse and unfair business situation for no fault of theirs.
ELCINA has brought this alarming situation to the notice of the Department of Information Technology as also the Finance Ministry. ELCINA strongly feels that these anomalies need to be addressed urgently and conditions have to be created to support this sector, failing which it apprehends that the country will face a deluge of imports due to surging demand of electronic products and emptying of our coffers which are presently flush with foreign exchange. Many of the manufacturing units may be forced to shut shop with all the consequential ill-effects of unemployment, and not to speak of loss of revenue to the exchequer.
New Delhi, July 21, 2005
RAJOO GOEL, SECRETARY GENERAL, ELCINA
ELCINA Electronic Industries Association of India
ELCINA HOUSE, 422 Okhla Industrial Estate
New Delhi - 110 020, India
Tel: 26924597, 26928053 ; Fax: 26923440
Website: www.elcina.com
<< back
|
What's New >> 
