The department of revenue issued a notification on Thursday withdrawing the duty exemption on "apparatus for carrier current line systems or digital line systems-HDSL system", which was announced in this year's budget.

The concessional duty regime was initially introduced in 1998, with finance minister Yashwant Sinha deciding to continue with the scheme for the second year running.

The equipment is crucial for network implementation, as it based on wireless-in-local loop (WLL) technology and allows quicker setting up of a network by bypassing the need to lay underground copper or optical fibre cables.

Under the scheme, a concessional duty of 20.32 per cent was levied on import of such equipment. This included a basic duty of 5 per cent, asurcharge of 0.5 per cent, and a countervailing duty (CVD) of 16 per cent.

With the withdrawal, importers will now have to pay a basic duty of 25 per cent, a surcharge of 2.5 per cent, a countervailing duty of 16 per cent, and a special additional duty of 4 per cent. The special additional duty is applicable in cases where the concessional duty is not applicable, said sources.

The duty rollback has major telecom manufacturers overjoyed. "Not only does it provide a fillip to indigenous manufacturers, it will also provide an incentive to basic service providers to get quality products at only 25 per cent of the price of imported equipment," said Himachal Futuristic Communications Ltd (HFCL) chairman Mahendra Nahata.

Basic service providers like the department of telecommunications (DoT), Mahanagar Telephone Nigam (MTNL), and private companies like Hughes Ispat, Bharti Telecom and Hexacomm are importing this equipment, citing unavailablity of the required technology in India. Telecom EquipmentManuafactures Association (Tema) chief PK Sandell said: "Many companies, including Indian Telephone Industries Ltd, HFCL and Crompton, are already manufacturing WLL equipment."

Ashok Jhunjhunawala of the Indian Institute of Technology (IIT), Chennai, credited with developing the CorDECT WLL technology, said that the finance ministry's move would go a long way in promoting the growth of domestic telecom research and development.