Manufactures Association for Information Technology (MAIT) has sent a letter to the Prime Minister Narendra Modi with 6 key recommendations covering inverted duty structure, tariff and duty anomalies, providing impetus to ICT hardware imports and developing a robust manufacturing eco-system.
MAIT’s member organisations claim to have invested over $2 billion in ICT manufacturing facilities across India and the current market size is close to $13 billion. MAIT is looking to grow this figure and attracting more investments into the sector under ‘Make In India’ initiative.
Here are some key points of the recommendations:
1. Extension of special additional duty (‘SAD’) exemption to all ITA goods manufacturers
It is suggested that the benefit of SAD exemption may be extended to all goods (including inputs, components and accessories as well as their parts and sub parts) when imported for use in the manufacture of ITA goods. This suggestion, if implemented, should provide the necessary impetus to domestic hardware manufacturers by eliminating additional tax / duty costs incurred on account of an inverted duty structure.
2. Enhancement of abatement under maximum retail price (‘MRP’) based excise valuation
The rate of abatement on all IT products should be increased from 20 percent to 40 percent under Notification No 49/2008 – CE (NT)1 which prescribes the rate of abatement for products under MRP based excise valuation.
3. Deemed export benefits’ in respect of information technology agreement (ITA) goods
It is recommend that ‘deemed exports’ status be provided to ITA bound goods in order to improve domestic hardware manufacture industry.
4. Speedy disposal of Special Valuation Branch (SVB) cases
A definitive time frame should be provided in the Customs Act for issuance of an SVB valuation order. While in certain cases, due to the complexity of the matter involved, it may be difficult to issue an order within the time prescribed, suitable guidelines can be placed such as obtaining approval from the higher authorities (Commissioner / Chief Commissioner) for taking additional time to dispose the application in such cases.
5. Prescription of higher rate of depreciation
In view of the above issue, it is recommended that a definition of the term ‘computer and computer peripherals’ be inserted in the CENVAT Rules to include all ITA bound products inter alia specifically including network and testing equipments. This amendment would ensure that all ITA bound products enjoy an accelerated depreciation rate in comparison to the depreciation rate prescribed in respect of capital goods.
6. Introduction of Goods and Service Tax (GST) legislation may be expedited
It is recommended that Central Government should come out with the draft GST legislation at the earliest for the purpose of understanding, discussions and eliciting the views of the business and trade. Business community should be provided sufficient time to understand and study the legislation and views and suggestions made by them can thus be suitably accommodated, clarified, taken into account at the time of introduction of formal GST legislation.
