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MAIT seeks govt's intervention to save industry

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CIOL Bureau
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BANGALORE, INDIA: As the Indian rupee tumbles 24 per cent against the US dollar during the past one year, the country’s IT hardware manufacturers’ body, MAIT, feels that it’s high time the government takes some strong measures.

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The association members met the senior officials of the ministries of commerce, finance and IT and apprised them of the situation arising from the rupee devaluation and rising component costs. MAIT in its 4-point agenda demanded formation of a committee and immediate action to save the Rs 70,000-crore hardware industry. 

The body is demanding incorporation of the Exchange Rate Variation (ERV) clause in government contracts, concession on duties and revision of contracts. With foreign exchange volatility, the industry, which heavily relies on government business, is feeling the heat.

HCL founder and chairman of the DEITY Taskforce Ajai Chowdhry said that electronics industry is the largest worldwide and contributes significantly to the national GDP. “The government needs to step in as the industry is facing a critical situation,” he said.

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There is no hedge fund for domestic companies, therefore, it’s a bigger problem for them, Chowdhry said. The industry, he said, is highly import-centric and competitive. “The large orders placed by the government during the last one year are under water,” he added.

The industry, already in disarray over hardware rising components pricing, is worried over the sliding rupee value even as it suffered a loss of Rs 500 crore in May alone.

MAIT president and Canon India SVP Alok Bharadwaj believes that it’s for the first time the industry is feeling the impact in such a big way. “Due to high input cost and rupee devaluation, it's a double whammy for the hardware vendors,” he added.

“With rupee derailing by 10 per cent in the last three months, the industry is bleeding every single day,” Bharadwaj said. The industry body feels that added pressure of 2 per cent in excise duty and abatement of 20 per cent continue to be major pain points.

Bharadwaj, however, is optimistic and said that the government will look at industry’s pertinent issues and facilitate protection towards rupee precariousness in DGS&D tenders and contracts. “IT industry’s health needs urgent attention as it has a key role in nation building and economic activities,” he feels.

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