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Industry trouble for Sibal’s Rs 1,500 laptop

A stiff guarantee clause in the government’s norms for its ambitious Rs 1500 laptop project is threatening to delay the plan to empower millions of Indian college students with a low cost computing device.
Hindustan Times | By Charu Sudan Kasturi, New Delhi
UPDATED ON JAN 29, 2011 11:20 PM IST

A stiff guarantee clause in the government’s norms for its ambitious Rs 1500 laptop project is threatening to delay the plan to empower millions of Indian college students with a low cost computing device.

The human resource development ministry is now preparing to relax the clause, which required manufacturers to provide a 15% guarantee fee upfront, after interested firms vetoed the norm, placing the project in jeopardy of missing its deadlines.

Top government sources have told HT that HRD minister Kapil Sibal will soon call a meeting with officials and possibly interested firms to discuss ways in which the guarantee clause can be relaxed.

“Without compromising the intent behind the clause, we will relax it to cater to the concerns raised by industry. The truth is that the clause we imposed was indeed unrealistic,” a senior government official said.

The government may either reduce the guarantee fee amount from 15% of the project cost, or may remove the condition that manufacturing firms need to pay the amount upfront. The government could instead simply pay 85% of the annual project cost after the first batch of laptops is delivered, sources said.

The firms, it is understood, have argued that the 15%guarantee fee was too high for a novel, high risk project like the mass manufacture of the cheap computing device.

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