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Converging on customs duties

01-March-2001
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Converging on customs duties

With Mr. Yashwant Sinha converging on customs duties, Budget 2001 has drawn a spectrum of reactions: the media and entertainment industry is thrilled, telecom players are lukewarm, and IT pundits call the duty changes a ``big let down''.

Media: The Information and Broadcasting Ministry had recently indicated that the media industry should be brought on par with the telecom and the IT sectors as far as taxes and duties on equipment are concerned. With customs duty reduction on cinematographic equipment from 25 to 15 percent, broadcasters are gearing up for some "competition".

Telecom: Even as the budget has left the custom duties on the GSM mobile handsets untouched, the good news for the WLL CDMA service providers is that the basic custom duties on CDMA handsets will come down from 25 to 15 per cent. The bad news: it is still 10 per cent higher than the basic duty of 5 percent custom duty charged on GSM handsets.

Meanwhile, the operators are happy that the costs of setting up telecom network infrastructure will come down as the duties for network components, which was 22 per cent for Base Transceiver Stations (BTS) and over 50 percent for microwave radio's will now come down.

Information technology: The budget has been a let down for the hardware industry. The hardware industry has been looking forward to the rationalisation of tariff with a reduction in excise duty to 8 per cent from the existing 16 per cent, and abolition of the 4 per cent Special Additional Duty (SAD).

But the drop in surcharge in the present budget results in a reduction of only 1.8 per cent on finished goods. The impact on raw materials will be a negligible 0.5 per cent reduction. MAIT's suggestions that the duty on imported parts and components including items of dual usage be brought down to nil, or that the terminal year for nil duty be extended to 2005 have not been considered.

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