Budget 2016: IT hardware sector expects Rs 10,000 crore investment, lower prices
New Delhi: Hailing budget announcement, IT hardware companies expect prices of devices like modems, routers, set-top-boxes to go down by 8 per cent within a year and about Rs 10,000 crore investment in local production.
"The change in duty structure will encourage manufacturing of consumer premise equipments like modems, routers, digital video recorder, STB for internet, IP camera. We expect investment of about Rs 10,000 crore for their local production. I expect their prices will go down by 8 per cent in first year and by 10 per cent in one and half year," MAIT Senior Vice President Nitin Kunkolienker told PTI.
The Manufacturers' Association for Information Technology (MAIT) however said though its a big boost for manufacturing of IT products, government has not given any impetus for local production of personal computers in the country and networking switches which are in heavy demand have also been left out.
The Union Budget for 2016-17 has reduced excise duty on these products from 12.5 per cent to 4 per cent without CENVAT credit or 12.5 per cent with CENVAT credit. Local manufacturer can claim duty benefits on VAT paid on purchase of various input materials. The increase in CENVAT credit will give benefit to domestic manufacturers against those importing such items.
"Government has imposed duty on some components like charger, battery used with mobile phones. This makes strong case for making components for mobile phones in India. Those who will import them will need to pay 12.5 excise duty and domestic makers will have to pay 2 per cent," Indian Cellular Association National President Pankaj Mohindroo.
Simultaneously, government has also waived off duty on inputs used for manufacturing components used for making chargers, battery, wired headsets and speaker of mobile phones. The budget overall has been a boost for IT and mobile hardware segment.
The government has also waived off basic custom duty (BCD) and special additional duty (SAD) for machinery and equipments that will be used for making electronic chips or semiconductor in the country.
"Exemption of BCD and SAD for ATMP for semiconductor wafer fabrication and LCD fabrication is a very well planned move and will certainly give a boost to local manufacturing especially to SMEs," IESA President MN Vidyashankar said.
At the same time the government has imposed BCD on finished products like telecom equipment. Vidyashankar said that the move will enhance domestic manufacturing and reducing import dependence.
At present, India imports over 90 per cent of telecom equipment from abroad. "Reduction of BCD on specific capital goods for manufacturing of various fuses is a boost to component manufacturing and enriching the supply chain," Vidyashankar said.
