Wanted: A Single Message for Hardware

I

was among the minority who didn’t get overwhelmed with euphoria on February

28. Yes, it was a good budget. Yes, software got sops, and perhaps it will

continue growing enough to reach that 2008 target. But something big was

missing.

That, of course, was the foundation of infotech: hardware. Here was the big

chance to finally make real domestic usage of infotech happen. To stop taxing

computers like a luxury item. To encourage people to buy a computer instead of a

second color TV. To spread IT usage rapidly across Indian towns so that we step

up our PC penetration tenfold. To spur manufacturing and the export of hardware.

A minor basic customs duty capping at 15%, a surcharge that got nixed–net

impact, maybe 3% of a PC’s price. Components still aren’t cheaper than PCs.

Importers stay SAD. Excise stays at 16%. NFEPC still prevents exporters from

selling freely in the domestic area, to get enough volumes to be competitive.

The silver lining: government spending on IT will go up sharply, between now and

March 2003.

Now, the Budget is a gigantic exercise, and it would require omniscience to

get everything right. After all, the government has been getting the software

part right for many years. So let’s see where we’ve been going wrong in

Hardware India’s message.

Unlike the software folks, hardware in India is not a unified community with

a single clear message. Manufacturers want protection and higher duty on

finished products, traders and distributors want zero duty on theem, EHTP

players want full access to the domestic area sans forex-positive clauses (and

sans taxes), manufacturers of dual-use items are worried about lowering duty on

IT components…conflicting messages.

Yes, we know that hardware and domestic IT usage is a critical foundation for

India’s future, her economy–and software. But we’ve done a poor job of

telling the government. The software community and Nasscom stuck to a simple

message: software means forex coming in by the billions, so don’t mess with

it. That’s a clear "unified messaging system": thus, kid-gloves,

zero hardware duty and more for the software industry.

Hardware India’s challenge, now, is to learn from the software guys. Get a

common agenda, get one message down. Make sure it conveys clear benefits,

including revenue inflow. Let it set clear targets: one PC for 35 Indians by

2005, for instance, with an "impact" roadmap–including revenues.

And maybe it should simply ask Nasscom, with its track record in lobbying for

the software cause, to take up hardware, next.

pkr@cmil.com