MAIT has welcomed the new foreign trade policy announced by union commerce minister Kamal Nath, which lays stress not only on promoting trade but also on creating economic growth with focus on employment generation. According to MAIT, the new policy, amongst others, has extended significant benefits to the IT hardware sector with favorable modifications to the EoU/EHTP scheme.

According to the press release, in addition, to prepare the hardware industry to meet the challenges of the zero-import-duty regime in March 2005, under India's commitment to the IT Agreement, and to make the domestic industry price competitive against global manufacturers, the government announced exemption of central sales tax on local procurement for EoU/EHTP.

Further, EOU/EHTP have also been exempted from levy of service Tax on services consumed from the domestic tariff Area.

Commenting on the new policy, MAIT executive director Vinnie Mehta said, "From the perspective of the IT hardware manufacturing industry, the exemption to the EoU/EHTP from CST on local procurement is a welcome relief. This will enable  the local EoU/EHTP manufacturers to procure components and other raw materials at par with their global competitors.

Further, the exemption from levy of service tax is indeed very heartening as hardware manufacturing involves a significant amount of sub-contracting. Service tax was having a cascading impact on costs of a local manufacturer in EoU/EHTP." 

"Some of the other measures announced by the Government viz. simplification of procedures, avoiding inverted tariff structures, upgradation of infrastructural network for streamlining the foreign trade chain and exports performance related incentives will boost the industry morale and give fillip to exports investments," he added. 

CyberMedia News
New Delhi

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