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Electronic firms want protection until 2005

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CIOL Bureau
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NEW DELHI: India must postpone a self-imposed deadline to cut tariffs to zero

on several electronic items and components to 2005 from 2003 to protect domestic

industry, four industry associations urged on Thursday.

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They said a drop in import duties to zero on several electronic components,

information technology (IT) and telecom hardware products without similar cuts

on capital equipment goods and common use items like steel and plastics would

hurt domestic manufacturing.

The bodies were the Consumer Electronics and TV Manufacturers Association,

Electronic Components Industries Association, Telecom Equipment Manufacturers

Association and MAIT, which represents India's computer hardware makers.

Officials valued the combined production of the four segments at 300 billion

rupees ($6.2 billion) a year and forecast it would grow five to six percent a

year over the next few years.

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India had committed itself to cutting import duties on 217 electronic, IT and

telecom products to zero by 2005 as part of a WTO-sponsored information

technology pact. But it pushed that deadline ahead by two years to bring down

prices and fuel domestic consumption.

However, Vinnie Mehta, MAIT's director said the government had simultaneously

committed itself to reducing customs duty on machines used in these industries

to zero and to phase out customs duty on all raw materials and inputs, which it

has failed to do.

Tariffs on them vary between zero and 35 per cent. "Without those

reductions, manufacturing would become unviable and India would be reduced to a

trading country," he said.

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Several leading TV makers including Sony, Matsuhita, Samsung and LG and

personal computer makers like IBM and Compaq have set up assembling plants in

India to take advantage of a growing market and keep prices low.

He said the government must also introduce a three-tier duty structure with

the lowest tariff rates on raw materials, a central rate on intermediate goods

and the highest rate on finished products.

Indians now buy some five million colour television sets and nearly two

million personal computers a year. The country also adds over five million phone

lines every year.

But officials said annual sales could increase several times over as Indian

personal computer, telecommunication and colour TV penetration still lags behind

even countries like China owing to high taxes.

(C) Reuters Limited.

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