Hardware industry confused

The IT manufacturing community in India appears to be still confused on the implications of the duty free regime which will come into effect in 2005.

This became clear during the discussions on Monday in Bangalore as part of the seminar on the 'Implications of the Duty Free Regime' held by MAIT (Manufacturers Association for Information Technology).

Ideas and concepts were thrown across the hall as people debated everything from whether manufacturing truly happened in India or whether mere assembly went disguised as manufacturing.

Whether the ODM route was the right way to go to increase manufacturing in the country or to whether the duty-free regime would change anything were the other points debated.

"With the duty free regime, the price of imported IT goods will fall. With that will follow a rise in demand and unlike the demand so far, this WTO imposed demand will be sustainable. This means more MNCs will be encouraged to set up manufacturing shop in the country. And once they do, components and assemblers will follow suit," said M V Appa Rao, MD, Solectron Centum.

While some averred with him, there were others who said that the 2005 duty free regime was more of a progressive occurrence in which duty has been regularly cut over the last two years.

They believe that the present 10 per cent cut in the excise duty, as it exists on PCs, will do nothing to boost demand and therefore change nothing in the larger scenario.

Also there was no consensus on whether a local market was necessary or not for increasing MNC manufacturing activities.