Industry In Favour Of Signing Infotech Pact

Industry is largely in favour of India signing the Information Technology Agreement (ITA), but seeks a longer phase-out period for tariffs on infotech products than will apply for developed countries.

These are the key findings of a Department of Electronics study, which sought the opinion of most industry associations on the issue.

India will be entitled to initial negotiating rights if it signs the agreement by March 31. If it comes on board after March 31, it will still be eligible to join the agreement but will lose these rights.

The agreement seeks to completely eliminate tariffs on approximately 200 infotech product categories.

 

Certain dates have been proposed by which the tariffs are to be phased out, with the process beginning in 1997 itself.

The proposal covers mainly computer hardware products, semiconductors and integrated circuits, computer software, telecommunications equipment and other information technology products. Over 150 of these products come under the purview of the department of electronics.

The agreement was mooted and carried forward by the Organisation of Economic Cooperation and Development (OECD) countries at the World Trade Organisation ministerial meeting at Singapore in December last year.

With the US and the European Union finally settling their differences, almost 30 countries agreed to sign the agreement.

The agreement is to be on a Most Favoured Nation (MFN) basis. However, it will become operative only if the number of countries joining it cover 85-90 per cent of the total global information technology production and markets.

Official sources said the government is inclined to sign the agreement, while simultaneously seeking a longer phase out period for tariffs. A final decision is expected to be taken by the Union cabinet in March.

However, it is not clear whether Indias plan to seek a longer phase-out period will be acceptable to the other members of the agreement.

The OECD countries have already indicated that product exceptions will be difficult to agree to for countries that sign the agreement.

Sources pointed out that the MFN clause would permit India to export its products at nil duty to ITA signatories even if it does not itself join the agreement. However, they added that India would still stand to lose out, since it would not be able to either attend meetings on the agreement or witness the decisions of the signatories.