Indian hardware manufacturers suffer disabilities

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Sudeshna Das

According to a study done by Manufacturers’ Association for Information Technology (MAIT), India IT hardware manufacturers suffer fiscal disabilities estimated at 6.47%. Disability on account of physical infrastructure and business environment estimated at 9.40%, aggregating a crippling 15.87%.

The study seeks to highlight that compared to other low cost jurisdictions, India poses some disabilities for IT-ESDM manufacturers. The cost of manufacturing is estimated to be higher in India vis-à-vis other global hubs. These are on account of physical factors such as higher costs of power, real estate, logistics, additional expenses on account of freight, as well as fiscal factors. India has a multitude of taxes and duties imposed by both the Central and State Governments. Because of their flawed structure, these taxes often discriminate against domestically manufactured products.

Therefore, the current study was designed to analyze in-depth the state of the IT hardware manufacturing sector in India, with special emphasis on desktop PCs, laptop PCs and servers, identifying inherent drawbacks when compared with China, Taiwan and other East Asian countries. Further, the study findings propose tax policy interventions in the immediate and short term that can lower the disabilities, reignite the growth in this sector and help it to contribute to India’s vision of ‘Make in India’ and ‘Net Zero Imports’.

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Urgent steps to address Fiscal and Market anomalies can enable doubling of IT hardware production in one year to US$ 2.6 billion. This in turn, will help to achieve the vision of ‘Net Zero Imports’ of ICT and Electronics hardware products by 2020, establish India as a global ESDM supply hub.

Favourable duty differential regime can potentially generate 10,56,000 jobs in India IT manufacturing and related services. If estimated annual demand for 21 million PCs by 2020 is fulfilled entirely through domestic production and the country garners a 30% global market share.

(A detailed analysis based on this study will be published in the Electronics Bazaar magazine, July , 2016 issue)

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