Maran stands by software firms on excise duty

The IT and Communications Minister, however, ruled out reconsideration of the 12% excise duty on computers.

india Updated: Mar 01, 2006 18:25 IST

Wedged between efforts to promote IT usage and potentially counter-productive excise duty on packaged software, IT and Communications Minister Dayanidhi Maran on Wednesday assured the industry that he would broach the subject with the Finance Ministry.

He, however, ruled out any reconsideration of the 12 per cent excise duty on computers, saying the industry had wanted it to boost local manufacturing.

"The industry has brought that (impact of 8 per cent duty on packaged software) to our notice... We will be representing the case to the Finance Minister... I am sure that the FM will accommodate this", Maran told reporters on the sidelines of a Microsoft function.

The industry fears high software prices would lead to low usage of IT and encourage piracy, which is already high, and discourage domestic software companies.

He said the 12 per cent duty on computers was a demand from the industry and "we presented the case to Finance Minister and I am happy that the FM accommodated this, helping us to promote indigenous manufacturing.

"Earlier, computers were imported much more cheaper than those that were manufactured in the country... The 12 per cent excise duty will put the imported PCs on par with domestic PCs", he said.

Even as MNC computer manufacturers like HP, LG and Samsung decided to raise prices of desktops and Notebooks by up to five per cent, Maran allayed fears of any upward spiral of prices in the industry.

"Do not worry... The demand will take care", Maran said.

"You must understand that the Finance Minister has to meet department's needs. The Budget has just got over, let the industry (telecom IT and BPOs) study where they have been affected and let them tell us... Certain things can be accommodated and certain things can't be", he said.

Maran was elated that President APJ Abdul Kalam had emphasised the need to manufacture semi-conductors in the country. "Our ministry put forward the idea to manufacture not just semi-conductors but all high tech IT products like plasma, LEDs and OLEDs and duty cuts for CD and DVD-Roms. We see the window to manufacture semi-conductors in India.

"We will be shortly coming with the policy as announced by the Finance Minister... And we are already working on it and it may be a matter of weeks", he said.

Already, SemiIndia is starting its facility in Hyderabad. IEMC has also started operations and other Assembly and Testing facilities were coming to India,the Minister said.

On the proposed changes in the Telegraph Act that will make cellular companies get funding from USO Fund to go to rural areas, he said: "We want to make sure that the growth of cellular telephony takes place in rural areas (and) not just in profitable areas.

"Our idea is to ensure that we try to reduce the cost. The we use the USO Fund to fund the basic telephony, we want that cellular penetration takes palce in rural India.

"We are consulting all the opeartors in what ways we can have sharing of infrastructure in rural areas where no one has gone or no one wants to go and a make cellular phone affordable to people there", Maran observed.

First Published: Mar 01, 2006 17:44 IST