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Editorial
Prescriptions for change
In any rapid growth scenario, there is always a pattern,
a pattern where the process of development is initiated; the
domestic capability to meet the spurt in demand is either
negligible or falls short. The same is the case with the Indian
Infrastructure Equipment Industry. Over the last few years,
the sector in India has seen a major restructuring leading
it to become a major manufacturing hub for IE for domestic
as well as foreign consumption. It is good augury that the
import of equipment, currently at 10-15 per cent, has created
an opportunity for the local industry to further advance the
huge potential. It has become an imperative for the industry
to invest in R&D, enhance capacity and capability to meet
the demand.
It's heartening to note that it is happening in various sectors.
EQUIPMENT INDIA tried to find out the impact of import, brand
new and used equipment, and interacted with over a couple
of dozen manufacturers, national and international, and also
the user industry. The present edition brings you an exclusive
report of the findings.
It is interesting to note that the industry is not afraid
of fair competition from overseas, and is not in favour of
any anti-dumping duty to be levied, unless there is enough
evidence of any specific case of dumping. But there is a strong
emphasis on safeguarding the industry against a possible chance
of dumping of equipment that could happen as a concomitant
of the present financial crisis.
The following are EQUIPMENT INDIA'S prescriptions to tide
over the crisis:
Special Additional Duty (SAD) @ 4 per cent, supposedly equivalent
of VAT / sales tax is levied for imports as against a VAT
of 12.5 per cent in most states. The Empowered Committee of
State Finance Ministers need to ensure levy of uniform 4 per
cent VAT for construction equipment, a capital goods input
for infrastructure building.
Abolition of all forms of local levies like entry tax, octroi
etc., which are normally not levied on imports.
Eligibility criteria for imports fixed more than 12 years
back needs a re-visit at the earliest by the Government.
Import duties on components for manufacture of capital equipment,
including cranes needs to be brought down to 3 per cent from
the existing 7.5 per cent.
Standardisation of equipment based on type and class pertaining
to various sectors.
Cap on the age of used imported equipment.
Central and state governments need to create a bigger shelf
of projects, at least for the next 15 years to assure manufacturers
and contracting firms.
Industry and the government need to jointly create a vast
pool of trained and skilled manpower.
AND as far as the IE industry is concerned there is an urgent
need to further enhance capability and capacity, strongly
backed up by proper after-sales services, alignment of R&D
expenditure to short and long term customer expectations in
order to position the products appropriately for domestic
and global markets.
There is a haiku which appropriately sums up India's case:
"From the withered tree a flower blooms"
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