"We appreciate that the commerce minister, Mr Murasoli Maran acknowledged in his speech that issues of Customs Duty and Excise duty in the IT/ electronics sector need to be addressed. But there were no measures in the EXIM policy to this effect," said Mr Vinnie Mehta, Director, Manufacturing Association of Information Technology (Mait).

"The hardware industry has had a long standing demand of modificationof the Electronic Hardware Technology Park Scheme (EHTP) and introduction of Special Economic Zones (SEZ) for the hardware sector. The industry had recommended removal of Exports Obligation and the Net Foreign Exchange positive condition. The hardware industry is an import intensive industry and it is not possible for manufacturers to meet such stipulation," he said.

Mr Mehta further added "Permitting 100 per cent retention of exports earnings in EEPC account by exporters in the SEZ is a very bold move and is the first step towards full convertibility of rupee. Some of the leading hardware majors had been asking for this as a pre-requisite to set up their base in India. This would allow them to park their funds in India and use it as an investment base."

Mait has also lamented the fact that the Government seems to be going easy in the face of the impending challenge of the WTO IT Agreement, which comes into effect in 2003. "Unless the Government adopts a strategic focus towards the hardware sector and measures to strengthen its foundation the entire IT industry - including the software and the service exports could suffer." said Mr Mehta.