Thrust on Telecom Gear Hub

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Jayanta Roy Chowdhury

The Narendra Modi-government plans to undertake a sustained drive to make the country a hub for the manufacture of telecom equipment as this can significantly curtail the trade deficit.

It plans to offer tax incentives to new players and set up exclusive industrial parks. Besides, the new government wants a structured set-up for import duties and policies that offer incentives to local production by making the import of finished products costlier.

A structured tax set-up, which imposes higher taxes on finished capital goods and electronics and lower tax on components, may be introduced from July.

At present, finished telecom equipment attracts zero duty but a levy of 10-15 per cent is imposed on components. The idea is to change this inverted duty structure to make local production more attractive.

A similar policy on encouraging components had been successful in automobiles in the 1990s. However, in telecom, this has not taken off even as the government had been mulling over this since early 2000 when Murasoli Maran was the telecom minister.

The plan was not successful mainly because of a piecemeal approach by the government. Till now, around $12.8 billion has been invested in telecom equipment manufacturing, with 75 per cent of the FDI coming in during 2007-12. However, this is considered small by global standards. Original post The Telegraph

Wahengbam Rorrkychand

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