High GST may hit Make-in-India electronics goal

High GST may hit Make-in-India electronics goal

Prime Minister Modi’s flagship Make In India plan could be hurt by the GST rates that have been set for electronics as some rates make it cheaper to import goods, industry players have said, possibly putting a damper on the government’s goal to achieve zero imports in electronics by 2020.

The Manufacturers’ Association for Information Technology (MAIT), the apex body representing India’s IT hardware sectors and certain manufacturers, expressed concern over tax slabs under  GST regime related to printers, monitors and data cables. Speaking to ET, Anwar Shirpurwala, Executive Director, MAIT said that although GST has reduced the number of taxes, the rates in some cases make it cheaper for importers than for smaller companies manufacturing in the country.

For example, the pre-assembled desktops are charged at 18% but standalone monitors that are mostly manufactured in the country are charged at 28%. “All IT products should be in one slab. Desktop computers are imported into India at zero percent and have been put at 18% GST and if you compare it with local company which manufactures a monitor or buys monitor and CPU locally to integrate and sell in India, there would be a clear difference of price. Government should look into this anomaly,” Shipurwala said.

He added that considering the importance of IT in government projects, it would be better if all IT goods, as described under the IT act, are subjected to a rate of 18% GST which would help local manufacturers build products and contribute to the cause of Digital India. “Make in India is a landmark initiative but it still needs concrete policies to lessen the burden of imports.”

Similarly, Chandrahas Panigrahi, Consumer business head of hardware and electronics organisation Acer said that though GST simplified taxation across states, putting all IT products in one rate slab would have helped the Indian hardware industry. Rahul Agarwal, CEO, Lenovo India said that a single tax slab would make fewer hassles for all organisations like them.

But analyst agencies like Aranca, IDC and KPMG that ET spoke to said that the overall impact of GST on hardcopy peripherals had been positive. Nishant Bansal, Associate Research Manager, at IDC India pointed out that accounting governance created by GST implementation, which requires businesses to maintain copies of electronic invoices to claim GST refund, largely contributed to the market growth in 2017 Q3.

The Economic Times, New Delhi, 24th November 2017