BANGALORE, Nov 6: India’s aspiration to become an information technology hardware destination is being thwarted by high duties and a WTO deadline which will bring down import duty on raw materials for hardware to zero, industry officials said on Thursday.

“If I set up a factory today within two years I will be out of business,” said Appa Rao, Managing Director of Solectron Centum Electronics, a electronics equipment maker.

“By that time all the imports will be duty-free to India under the World Trade Organization pact. Why must I make any investments, why should I import now with a customs duty of 25 per cent?” Mr Rao asked delegates at the India Hardware Summit in the IT hub of Bangalore.

“Now, when we import we have to pay duties and on top of it we have to pay sales tax. There is a cascading effect of taxes,” he said.

The average rate of duty on hardware products is currently about 15 per cent. Under the WTO the Indian government is committed to reducing tariffs on imports by 2005.

Government officials said that duty on imported raw materials and inputs for the hardware would be zero by March 1, 2005.

India’s hardware industry, consisting of 2,000 Indian and multinational companies, is worth $4 billion.

India’s premier trade body, the Confederation of Indian Industry, said hardware exports such as computer devices, handheld devices and IT design were expected to grow to $25 billion by 2010.

Ram Agarwal, chief executive officer of WeP Peripherals Ltd, a firm which makes printers, said huge disparities existed in the duty structure which made domestic companies uncompetitive.

“There is a lot of opportunity to create new products. Look at the installed base of telephones which is about 60 million, personal computers number about eight million and the television base is also large.”—AFP