MAIT approaches government to save IT hardware industry

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The Manufacturers’ Association of IT (MAIT) has urged Ministry of Finance, Ministry of Commerce & Industry and Ministry of IT & Communications to address the critical challenges faced by Indian hardware industry due to the existing foreign exchange volatility, says a itVAR News Network report.

At a recent press conference, MAIT pointed out that the IT hardware industry has already proven to be the backbone of nation’s growth as it is critical enabler in enhancing inclusion, reach, productivity & speed in all kinds of economic activities. It is particularly most relevant to all government projects and programs like those of education, e-Governance, healthcare, financial inclusion, etc as more and more use of technology is being adopted.

The current size of Indian IT Hardware industry is estimated to be Rs 700 billion. The industry suffered enormously in the year 2011-12 due to supply line disruptions caused by Japanese Tsunami and Thailand floods which increased the prices of key components. However the biggest impact to the industry is the rupee devaluation and industry has been bleeding for last 3 months with all IT hardware companies in red regardless of domestic manufacturers or multinationals as the industry has over 85 per cent import content.

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“A bigger tsunami has hit the Indian IT Hardware industry in the form of rupee devaluation. We are all in red for the last three months. Losses are accumulating, causing cash flow challenges and blocking investments. Almost 85 per cent of the entire industry has import content and more than 50 per cent of our industry’s consumption is government contracts centric. It is impossible to honour such contracts with 10 per cent devaluation in just 90 days. The Forex volatility is an area of grave concern and we are knocking all doors in the government with a strong request to immediately bail out the Indian IT hardware Industry” said Alok Bharadwaj, President, MAIT and Senior VP, Canon.

“MAIT has approached Ministry of IT, commerce & Finance to impress upon the plight of the industry. The officials recognise the urgency. While the industry strongly supports the cause of enhancing domestic manufacturing in India, we also realise that this will take time to become a reality. Till then, we will need to continue importing components and sub-components to cater to the burgeoning demand of IT hardware in the country. In pursuit of that, the industry has to be attractive for investments and hence must build sustained profitability” added Bharadwaj.

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