(a) whether the Telecom Equipment Manufacturers Association
(TEMA) has submitted any memorandum to the Government with
regard to granting them deemed export status;
(b) if so, the details thereof;
(c) whether the Government have considered their demands; and
(d) if so, the action taken by the Government in this regard?
THE MINISTER OF STATE IN THE MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY (SHRI TAPAN SIKDAR)
(a) & (b) Yes, Sir. Details are placed at Annexure.
(c) & (d) The proposal given by Telecom Equipment
Manufacturers Association (TEMA) was considered by the
Government. In the new Export & Import Policy 2002-2007,
Electronic Hardware Technology Park (EHTP) scheme has has been
modified to extend the following benefits:-
(i) Positive Net Foreign Exchange earning as a Percentage of
Exports (NFEP) to be achieved in 5 years.
(ii) No other export obligation for units in EHTP.
(iii) Supplies in the domestic market of Information
Technology Agreement (ITA-I) items having zero duty shall be
eligible for counting of export obligation.
ANNEXURE
TEMA
PROPOSALS FOR UNION BUDGET 2002-03
1 DEEMED EXPORT STATUS-Modified EHTP Scheme- Lowering
Customs Duty on Inputs below duty on final product
Customs Duty on finished Telecom products, as a part of
IT Sector, has been gradually reduced over the years
without commensurate reduction in the duties on
inputs/components/raw materials. The current basic rate
on all the finished Telecom products is 15% whereas input
duties vary from 15% to 35%. The domestic manufacturing
industry is suffering due to this anomaly. All telecom
products will be under ZERO duty regime from 2003 as has
been announced by the Govt. A calculation table showing
disadvantage of 44.8% to the indigenous telecom supplier
vis-à -vis imports in case of telecom cables as TABLE ‘A’
is attached.
To correct this situation, TEMA strongly suggests “Deemed
Export Status†be accorded to the Domestic Telecom
equipment manufacturing industry. for supplies made to
all the Licensed Operators including BSNL, MTNL etc, and
Government Departments like; Defence, Railways, Space,
Power Sector and GAIL etc. so that these important
sectors can get the benefit of the indigenously produced
Telecom products at international prices. This will also
reduce the infrastructure development cost which will
ensure the benefits going to the masses. Imported inputs
would be available at Zero duty and local suppliers would
in turn claim deemed export benefits. This percolation of
Deemed Export benefit down the value chain shall ensure
that the maximum possible value addition in the
manufacturing activity is retained within the country.
Granting this status would ensure manufacturing activity
in the important area of IT & Telecom where the demand is
exploding. Min. of Information Technology (MIT) has
estimated hardware demand of USD 165 billion by the year
2008. If the domestic manufacturing industry does not
exist the foreign exchange ramification due to imports
need to be evaluated.
One of the simpler means of implementing the deemed
export facility for Telecom Manufacturing Sector can be
the existing EHTP scheme under EXIM policy, which needs
only minor modification to provide a level playing field
for the domestic industry. The Working Group on
Information Technology for the 10th plan under MIT has
already recommended that existing and new units in the IT
and Telecom Equipment Industry be allowed to register
themselves under the proposed “Information and
Communication Technology Park†scheme (ICTP scheme). This
shall be a modification of the existing EHTP scheme in
the following respects:
a) ICTP Units shall be allowed to sell 100% of their
production into the DTA without any Export Obligation. This
will provide for global scale flexible manufacturing both for
domestic as well as export market in a duty free environment.
b) Sales to DTA shall be allowed against payment of 50%
customs duty and other domestic taxes. This 50% concession is
expected to take care of the disability factors like interest,
infrastructure etc. for the domestic industry.
c) The ICTP units should also be allowed to function
without physical control and clearance of the goods
should be through self-certification only with the
monthly/quarterly reports based on a format similar to
that allowed under Appendix 16-H of the EXIM policy.
TEMA
TELECOM IMPORTS Vs INDIGENOUS COMPARATIVE CALCULATION OF LANDED COST
DOMESTIC TELECOM Budget Budget IMPORTED Budget Budget CABLE TELECOM 2000 2001 2000 2001 CABLE INPUTS 100.00 100.00 CIF Price 100.00 100.00
(Copper, PE, Jelly, Steel, Aluminium etc) Basic Custom Duty 35.00 Add Custom 20.00 15.00 @ 35% 35.00 Duty @ 20% SBD @ 10% 00 SBD 0.00 3.50 0.00 CVD @ 16% 21.60 CVD @ 16% 19.20 18.40 22.16 139.20 133.40 SADD @ 4% 6.26 SADD (in 5.57 5.33 6.43 lieu of CST) @ 4% 167.09 162.86 TOTAL 144.77 138.73
Less Modvat on CVD 21.60 22.16 144.93 141.26
Add Excise Duty @ 22.60 16% on FINAL 23.19 PRODUCT 168.12 163.86
Add Central Sales 19.66 Tax @ 12% 20.17 TOTAL 188.29 183.52
DISADVANTAGE TO LOCAL INDUSTRY :
BUDGET 2000 - 43.5% BUDGET 2001 - 44.8%