Perhaps, a group will soon emerge in India, who will call them as American-Indians because of their high packages. The pay package is no more a constraint today as the performance-based pay is gaining ground in the industry. Similarly, at the junior level the average attrition rate has moved up to 30 per cent in the IT and 40 per cent in the ITeS industry.
This is, of course, a healthy sign for the Indian industry. And, this trend will surely continue for long as the Government of India has made a positive move for more and more direct investments in manufacturing and IPR development through its current budget session.
The Minister of IT & Communications, Mr. Dayanidhi Maran, in his presentation of Union Budget 2006, has made it clear that he would announce a policy package for manufacturing highly capital-intensive IT products such as semiconductors, assembly, testing, wafers, Flat LCD/OLED/Plasma displays and storage devices. The Government will consider gap funding of such projects through IIFCL in a time frame of three years. On the customs duty front, the peak rate of Customs Duty has been reduced from 15 to 12.5 per cent. However, all the products listed under the IT Agreement of the WTO continue to attract nil customs duty. The 4-per cent Additional Duty will not apply to cellular phones as they are at nil customs and nil excise duty. Similarly, excise duty of 12 per cent will be imposed on PCs, and its components will carry nil excise duty.
On the other hand, from the IT channel perspective, the impact of 2006 Budget is quite encouraging due to the reduction in the duties on DVD-ROM Drives, Combo Drives and USB Flash memory (Pen Drives). The opportunity for assemblers has increased due to increased cost (on account of Excise levy of 12%) of Imported Computer Systems, Notebooks and Servers. Further, some cost will also increase in the case of Indian big brands as well. The PC price of imported and Indian big brand Systems/Notebooks/Servers will go up due to Excise levy of 12 per cent. The input credit available will be 7–8 per cent approximately against the Excise levy of 12 per cent. It means a healthy sign for domestic PC manufacturing and market as well.
Sanjay Mohapatra
Editor
