IT-electronics sector seeks govt help against protectionism, tax incentives

The electronics and information technology sector has called for a differentiated excise duty structure while keeping import duty on mobile handsets and components high, in order to boost domestic manufacturing.

During finance minister Arun Jaitley's pre-budget consultations with the electronics and IT sector, representatives of the IT sector invited the minister's attention to the protectionist trends in developed countries and called for policies aimed at safeguarding the interests of Indian industry as well as national interests.

In recent times, software development and information technology enabled services (ITeS), including business process outsourcing (BPO)/ knowledge process outsourcing services (KPO) industry, in India has emerged as one of the most dynamic and vibrant sectors with huge employment potential.

They, however, pointed out that considering some recent protectionist and discriminatory policies followed by other countries, the IT sector would need government's help at policy level to combat visa restrictions issues as also to ensure economic interests.

Representatives of electronics industry wanted the government to continue with steps taken in the previous budget to promote indigenous manufacturing of electronic goods while taking more steps to include rationalisation of the tariff structure.

They also wanted extension of the differential excise duty dispensation to mobile handsets/ tablet computers and other specified electronic equipment in the forthcoming budget for promoting broadband.

Further, they suggested that investors in the telecom sector should have:

  • Access to easier finances like tax-free bonds;
  • Lower GST rates on telecom services to 12 per cent from 18 per cent;
  • BCD on all non-ITA-1 products;
  • Depreciation benefits for Make in India;
  • Promote components hub;
  • Keep electronics sector out of regional comprehensive economic partnerships; and
  • Increase import duty on mobile handsets.

Jaitley said the government has, over the last three years, taken various steps to promote indigenous manufacturing of electronic goods, including rationalization of the tariff structure with extension of differential excise duty dispensation on specified electronic equipments and withdrawal of duty exemption etc.

He said the Union Budget 2017-18 had aimed at creating an eco-system to make India a global hub for electronics manufacturing, the allocation for incentive schemes like M-SIPS and EDF has been exponentially increased to Rs745 crore.