The Telegraph
Since 1st March, 1999
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Telecom gear makers fume

Calcutta/New Delhi, March 22: With about a week to go for the export import policy, the Telecom Equipment Manufacturers Association of India (Tema) is crying hoarse over what it calls the government’s “inverted duty structure”. According to the association, the inverted duty structure results in a less than level playing field, where domestic manufacturers are at a substantive disadvantage. “The government should make it clear whether it requires a manufacturing base at all in the country or not,” Tema president N. K. Goyal said.

At present, import duty on components and raw materials are as high as 25 per cent, while finished goods attract a duty of 5 per cent.

“The result is that it is cheaper to import finished goods than components that make it,” he said.

The sector is even more worried about the 2005 deadline for meeting WTO commitments. “We are committed to zero duty by 2005 on finished telecom equipment, whereas there is no commitment under WTO for duty on components or raw materials,” said Goyal.

“This sector has spearheaded a dramatic fall in the prices of telecom equipment by almost 50 to 70 per cent. It has also provided more buying power for the government for building a strong network,” Goyal said. “With Rs 12,000 crore already invested and goods worth over Rs 17,000 crore produced, the sector has generated employment for around two lakh knowledge workers,” he said.

“The equipment industry has to suffer a 37 per cent increase in price due to the tax factor alone. We are told we must compete with foreign manufacturers and then the government weighs us down with high incidence of excise duties and sales tax while our foreign competitors are pampered with zero or negligible duty on imports. This is no level playing field,” Goyal said.

“Despite the kind of investments that this sector has witnessed, capacity utilisation has remained at approximately 40 per cent only due to inverted duty structure, which just encourages imports.”

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