Computers to get cheaper in India
Computers to get cheaper
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Publish Date : 3-1-2005 3:43:00 PM Source : Business News ExpressNewsline.com
The Indian IT industry Monday said computer prices would drop between three percent and six percent after the general budget unveiled duty concessions for players in the sector.
Presenting the budget for the fiscal year 2005-06, Finance Minister P. Chidambaram said the IT industry was expected to offer an additional seven million jobs by 2009.
It is a wonderful budget from an IT industry perspective. Overall we are looking at price reductions of between three and six percent on computers," Sameer Kochhar, CEO of Skoch Consultancy Services.
"This is due to the combined effect of customs duty coming down to zero and CVD (countervailing duty) being brought down to four percent from the current level of eight percent," he added.
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As per an Information Technology Agreement (ITA), India is required to bring down the duty on 217 items to nil.
"Consequently, to provide a level-playing field to the domestic industry, I propose to remove the customs duty on specified capital goods and all inputs required for the manufacture of ITA bound items," said Chidambaram.
A countervailing duty of four percent will be levied on the imports of ITA bound items and their inputs that attract nil duty, added the finance minister.
"This would enable the computer industry to sustain a growth of 40 percent or so during 2005. Computer penetration would keep increasing outside the metros at a faster pace," added Kochhar.
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Suresh Vaswani, president of Wipro Technologies, said Chidambaram had done a commendable job of balancing pro-reform policies and ensuring that the domestic agricultural and manufacturing industries get adequate support.
"We look forward keenly to see how the government develops the blueprint for the creation of the seven mega-cities in India as it is imperative that we vastly improve our infrastructure to be on the same lines as China.
"The proposed investments in education and infrastructure would augur well for the future compebreastive edge for the IT industry globally."
Saurabh Srivastava, executive chairman of Xansa India, said a minimum government spend on e-governance should have been committed in the budget.
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The prevailing doubts regarding the taxation of overseas companies doing BPO (business process outsourcing) business in India should have also been addressed, he added.
"Fear of such taxation is currently driving many of our companies to competing countries," said Srivastava.
On the budgetary proposal to tax some perks, Srivastava said while taxing perquisites was understandable, the proposed definition included items that were genuine business expenses such as travel and stay at hotels.
"For the software and services industry, which has 80 percent of its clients overseas, the movement of people back and forth is a part and parcel of delivering the services," he said.
"Taxing such expenses would be patently inappropriate, unfair and hugely detrimental to the growth of this industry, which is expected to generate, as per the finance minister's projections, seven million jobs in 2009.
"This is also against India's stated position in WTO about encouraging the free movement of people across national boundaries for delivering services."
The industry hailed the government's move to provide small and medium units in knowledge-based industries such as pharmaceutical, biotech and IT equity support through a fund with a corpus of Rs.5 billion."