The association calls for faster clearances and streamlining of procedures to improve the conditions for doing business in India
MAIT, the apex body representing IT manufacturers, has outlined a set of reforms needed to
improve the business environment for IT manufacturing and to push India’s overall position in the
world market in terms of the ‘Ease of Doing Business’ index.
According to the World Bank’s Doing Business 2016 data released recently, India currently stands
at #130, which is way below China at #90.
MAIT has highlighted certain complexities in existing procedures that are creating bottlenecks for
IT manufacturers in conducting their business effectively.
Mr Anwar Shirpurwala, Executive Director, MAIT says, “At present there are multiple regulatory
and operational issues plaguing the Indian manufacturing sector, and the IT hardware industry in
particular. If the government is serious about campaigns like ‘Make in India’ these issues will have
to be resolved quickly. The business environment in India has to be improved and brought at par
with other countries.”
As part of MAIT’s Pre-budget Recommendations, shared with the media, the following key reforms
have been suggested by the association to ease the business environment for the IT manufacturing
Reduce time taken for customs clearances: This could be done by extending the green
channel facility for free movement of goods pertaining to R&D shipments; encouraging hand
carriage of goods with provision for monthly customs duty payment facility; relaxation of
mandatory first check processes at the ports pertaining to free of charge/ exempted shipments;
and avoiding Special Valuation Branch (SVB) inspections for goods that are already cleared under
duty exemption schemes.
Avoid MoEF clearance for import of refurbished goods for testing or R&D: To avoid undue
delays in movement of goods, it may be clarified that second hand/refurbished goods imported
into India for genuine business purposes do not require clearance from the MoEF (Ministry of
Environment and Forest). Such clearance must be required only for goods that qualify as ‘waste’
or ‘scrap’. Further, second hand/refurbished goods when imported by SEZ/STPI units for the
purpose of testing or R&D shall not require prior clearances from MoEF.
Convergence Cell to Improve Clarity in Product Classification: IT products get introduced into
the world market on a daily basis and are imported into India. The nature of the industry is such
that in practically all cases the time span of obsolescence is very short. This requires clarity in
classification and rapid decision making by the Customs authorities. Therefore, it is suggested that
a Convergence Cell be formed to decide on classification of new IT products within 30 days of
representation to reduce instances of confusion and cases of litigation.
Incentives to Encourage Domestic Manufacturing: Among the other reforms outlined to
improve business conditions, MAIT has called for more clarity with regard to levy of basic customs
duty (BCD) and exemption of goods manufactured by SEZ units for the domestic market. It has
sought for speedy disposal of Special Valuation Branch (SVB) cases to avoid unnecessary delays
and uncertainties. MAIT has also suggested amendments for rationalization of tax structures to
avoid double taxation (VAT and Service Tax) and relaxation of CENVAT restrictions to improve
credit access for certain services.
“The government would need to take concrete steps to ensure proper utilization of domestic
manufacturing capacities. The existing capabilities of IT manufacturers have so far remained
underutilized due to adverse tax policies and a poor eco-system,” asserts Mr Shirpurwala.