Assocham calls for reduction of import duty on security gadgets

New Delhi, Jan 3 (UNI) Industry body Assocham today advocated the need for reduction in import tariffs on security related electronic products from 37 per cent to 18.5 per cent.

In its Pre-Budget Memorandum submitted to the Finance Minister P Chidambaram, the chamber has also urged customs tariff reduction on raw material, inputs, components require to manufacture, electronic items including telecom equipment to zero per cent. The annual turnover of domestic security industry is estimated at Rs 6,000 crore, of which Rs 3,500 crore is constituted by electronic equipment and the balance Rs 2,500 crore is shared by security guarding agencies and detective agencies.

Of the Rs 3,500 crore of electronic security equipment in market, nearly 50 per cent constitutes the indigenous part with cables, connectors, power supply, installation, commissioning and other indigenous equipments.

Thus 50 per cent of the Rs 3,500 crore forms imported components/products eligible for custom duty. The custom duty comes to about Rs 500 crore.

The chamber has pointed out that abolition of customs duty on the products by 50 per cent would incur an insignificant revenue loss and have advantages that will make India more secure by reducing the chances of terrorist activities through installation of electronic security surveillance system.

The reduction in customs on electronic security products would help India avoid smuggling and under invoicing and generate further employment for installers and the integrator.

Assocham has also emphasised that in view of the fact that a number of the FDI proposals are being materialised in the near future, it is necessary to create an eco system which invigorates not only investments but also benefits to the consumers and create sizable opportunity for employment generation in a way to provide positive outlook to the economy.

There is a need to create a level playing field for the indigenous products to compete with the imports, it said.

The organistion has urged the need for sub-assemblies to be treated at par with finished products to promote Electronic Manufacturing services (EMS) an emerging area with huge potential.

All the inputs to the components industry should not attract any custom duty so as to enable domestic components industry to compete with the imports, Assocham President Anil K Agarwal said.

The chamber further suggested that similar to the dispensation already given to the inputs of Telecom equipments -- permitting them to be imported at zero custom duty -- by further extending the zero duty imports under Customs Notification Nos 29 and 25 to the inputs required for the manufacture of components and other inputs of WTO-ITA-1 products.

It has also recommended that the excise duty rate should be reduced from the current level of 16 per cent to 14 per cent in 2007-08 Budget and at a later stage to 12 per cent level.

The two per cent reduction in excise with consequential lower incidence of state and local taxes will have three to five per cent reduction in prices.

This in turn will increase the demand for manufactured goods leading to higher industrial growth. The government should also consider withdrawal of tax exemptions currently extended to a large number of products and retain only for bare minimum items like infrastructure goods and process foods.

UNI