Mumbai, Nov 2: Hard on the heels of the internet policy, the Prime Minister is likely to approve a series of measures to boost the computer hardware industry. These measures which are contained in the second part of the IT Task Force recommendations are to be submitted to the Prime Minister today. Cabinet approval is expected within the week."The Finance Minister has already blessed the report," Manufacturers Association of Information Technology (MAIT) director Vinnie Mehta told The Indian Express. The association, which is among the major industry bodies behind the report, discussed the report with the Finance Minister on Friday.The IT Task Force has committed an exports target of US $5 billion to be achieved by October 2005, on strength of the package. "On the fulfillment of such target by the industry, the Government of India will extend the policy package for a further period of three years up to October 2nd, 2008," the text of Task Force report said.The report envisages the creation of a SoftBonded IT unit (S-BIT) to do away with the disadvantages being faced by the manufacturers in the Domestic Tariff Area (DTA) and Electronic Hardware Technology Parks (EHTPs).The S-BIT scheme is radical in the sense that it does away with all prior clearances. All clearances are "a-posteriori" instead of "a-priori" and are based on self-declaration through legally enforceable undertakings (LUTs). In other words, all S-BIT units will only be subject to fiscal and procedural controls without a-priori physical controls.The unit will keep accounts of utilisation of imported duty-free raw-materials utilised for manufacture and render accounts on post-audit basis. It will have permission to import all its needs without payment of import duties and on a self-declaration.The scheme has been proposed after an in-depth study of manufacturing hubs like Taiwan, Malaysia and Singapore, according to Mehta. Other apex industry bodies like the Telecom Equipment Manufacturers Association (TEMA) are also enthusiasticabout the scheme. "It is a beautiful piece of legislation," said Ashok Kanodia, TEMA president, "Hardware manufacturing has almost vanished. But this will put the industry back on track."S-BIT units will also not have any export obligation and be free to sell all their products in the domestic market. Finished goods will only be charged 65 per cent of the existing duty while selling to the local market, while intermediate products will attract 75 per cent of that. Earlier, approving the 108 recommendations contained in the first part of the IT task force report (covering software and associated services), the government had advanced the zero import duty target on all IT finished goods from 2005 to 2003.
