As per industry estimates, India is expected to see an annual | |
demand of 300 million phones, 100 million laptops, 120 million | |
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US $ Billions,%, 2014
Source: Observatory of economic complexity; Team Analysis
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tablets & e-readers and 100 million dongles, to the tune of
USD 100 billion.
Providing a more facilitative environment in terms of supportive
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The import bill for IT electronics for the year 2014 comprised of approximately USD5 billion of PCs and another USD7 billion
8 for mobile phones. In unit terms, India manufactures only close to 2 % of the global IT electronics requirement.
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fiscal and physical policies to manufacturers of desktops, laptops and servers will provide the much needed boost to the manufacturing sector, in tune with the philosophy of‘ Make in
India’. It will also lend support to the software industry which is the mainstay behind India’ s exports. India would have at least 5
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The IT hardware sector, more particularly the desktops, laptops |
billion connections by the year 2020. This would necessitate |
and servers, is a“ creator” as brought out in the following |
expansion of telecommunications networks and increase in |
exhibit: |
demand for various types of IT and telecom equipment. |
It is important to note that with the government’ s favourable |
India ' s success in IT / ITES would never be complete and would |
policies and other growth drivers such as higher real |
not touch the lives of masses without commensurate growth of |
disposable incomes, easy consumer credit, falling prices of the |
electronics sector. Composite and integrated growth of both |
products and their increasing penetration and growing |
sectors – software and hardware, is the only route to make |
consumer and industrial base, there has been an increased |
India a global technology powerhouse. |
Experience in India has shown that there is still a disability cost |
Disability areas |
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compared to other markets around the world. Due to factors – |
The following are the disability areas in the Indian electronic |
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both fiscal & physical – manufacturing in other locations is |
system design and manufacturing that prevent its growth: |
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more viable and profitable when compared to manufacturing products in India.
Fiscal factors that are hampering manufacturing growth in
India are linked to the existing tax structure. This includes
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A. Taxation related disability a.
Differential Excise duty / CVD SAD on finished products b.
VAT on finished products
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central and state taxes that differ for products manufactured in |
c. |
Non creditable CST and Entry tax |
the country and finished products that are imported. Physical |
d. |
VAT credit reversal |
factors that are curbing manufacturing in the country include |
e. |
Blocked input VAT on goods used in provision of |
transformation costs such as operating expenses, regulatory |
services |
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expenses, labour, power, transportation, logistics, customs, and so on.
For the purpose of this Report, the overall disability has been considered to be the difference in the selling price of a product
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f.
Blocked Input taxes on certain inputs g.
Non-cenvatable Swachh Bharat Cess
B. Business environment disabilities
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manufactured in India( Case 1) and the price of the |
a. |
Higher cost of finance |
same / similar product when imported( Case 2), including all |
b. |
Poor domestic availability of components |
import taxes, as a percentage of the selling price of the |
c. |
Poor infrastructure |
product manufactured in the country. |
d. |
International marketing cost |
Disability has been broadly classified into disability due to tax structure and due to various other factors in the business environment. Disability due to tax is the difference in the overall taxes paid in India in Case 1 and Case 2, as a percentage of selling price of domestically manufactured products. |
A. Taxation related disability
Disability due to tax is the difference in the overall taxes paid in
India when similar product is locally when manufactured and imported( after offsets) as a percentage of the selling price of products manufactured in the country. It is worth mentioning
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