New Delhi, Nov. 9: Telecom equipment manufacturers in India have urged the government to bring down the customs duty on all input components used to manufacture telecom equipment.
The manufacturers have also asked the Department of Telecommunications (DoT) to provide a certificate to facilitate import of dual use telecom equipment. At present, static converters attract 15 per cent duty but for the manufacturers it adds up to 25 per cent since they already pay 10 per cent for the telecom component that has to use the static converters.
In a pre-budget memorandum to the government, the Telecom Equipment Manufacturers Association (TEMA) urged the government to remove customs duty on all inputs and accessories (chargers, batteries). “Duty for transmission apparatus for radio telephony, radio telegraphy, cellular phones and other two way radios should be brought to zero,” says the memorandum submitted to the communications ministry by TEMA.
The memorandum has also pointed out that the Export Hardware Technology Park scheme, announced in the Exim Policy 2002-07, has not attracted any telecom equipment manufacturing company. The committee has proposed an amendment to the existing EHTP scheme to make it attractive for the sector.
Under the current provisions, the manufacturing units cannot get the benefit of revised EHTP scheme till 2005 since the net foreign exchange as percentage of exports cannot be positive in a period of five years primarily due to inverted duty structure where imports of inputs and components attract higher duties than the finished product.
TEMA has suggested that the products in the ITA-1 product hierarchy at the existing tariff may be covered under the EHTP scheme.
TEMA has also asked for reforms in customs procedures and clearance such as self-certification and post audit, procedural controls in place of physical control to reduce the period of clearance and thereby give effective inventory control to manufacturing units.
The association has also suggested that service tax and sales tax be merged into a value-added tax and the imports covered by VAT. It has asked the government to introduce single VAT system and encourage the private service providers to purchase domestic equipment. The committee has called for a 10-year tax holiday to existing manufacturers as well as new units.
The telecom sector has to invest Rs 1,67,000 crore during Tenth Five Year Plan to meet the teledensity target of the National Telecom Policy.
“Assuming just 70 per cent of the total telecom investment is being made in the purchase of telecom equipment, the telecom sector shall be purchasing goods worth more than Rs 1,15,000 crore during 2002-07, an average of Rs 23,000 crore per annum,” said N.K Goyal, president of TEMA.