Extend Software Sops To Hardware Firms: It Panel

The information technology task-force's second report has suggested that fiscal and financial concessions accorded recently to the software sector be extended to the hardware sector.

It also calls for simplifying procedures to boost production _ from low value-added subcontracting to top-end integrated circuit fabrication _ of the domestic electronic hardware sector. The report has been finalised and is slated to be discussed at a meeting of the task force today.

The suggestions include creation of a "competitive climate for investment and production to be put in place including customs, foreign exchange regulations, labour laws, banking facilities and support infrastructure".

The report suggests that all transactions of the Central Board for Excise and Customs be computerised. It adds that in a year, the CBEC should have an `Information infrastructure' which will enable all transactions to become electronic.

 

To this end, it suggests elimination of all papers/ challans, doing away with rubber stamps and signatures, clearing advance cargo through electronic data interchange (EDI), automate all clearance procedures through a single window computer network 24 hours a day, 365 days a year, permit all exports/imports within 15 minutes, deliver of air cargo within 8 hours (minimum) to 48 hours(maximum, and use simple bar code-based identification.

Siginificantly, the task force has proposed that all clearances by the CBEC be on the basis of "only self-declaration without insisting upon any permits, thereby making access to the domestic tariff area simple. Here, the Green Channel import clearance is required to be broadbanded."

The task force has called for a rationalisation of tariffs through a correction in the customs and excise duty structure in electronics wherein the effective duty on inputs should not be more than that on finished goods. Electronic hardware and component companies have been lobbying for a correction of the duty structure for some years now.

The second background report _ the first one focused on software _ also suggests a number of financial and fiscal incentives for the hardware sector. Among them are a proposed blanket approval for overseas investment for acquisition of IT hardware companies across the board for IT hardware exporters with previous three years comulative actual export realisation in excess of $25 million to be given up to 50 per cent or US $ 25 million, whichever is lower, out of the cumulative actual export earning of the previous three years.

Suggestions relating to lending to the hardware sector include a proposal to treat the IT hardware sector as priority sector by banks and the permission to allow employees stock options. Also, the task force has suggested delinking extension of working capital to IT companies against traditional collaterals and permission to venture capitalists to set off losses in one invested company and profit in another invested company during the block years for the purpose of income tax.