A high-powered committee today proposed income tax exemption for the computer hardware industry and local sourcing of the government's IT requirements to encourage production in the country.
The committee, which submitted its report to Communications & IT Minister Dayanidhi Maran, has said that a minimum five-year tax holiday should be provided for manufacturing of critical components like hard-disk drive, LCD panels and CD/DVD-ROM drives, with units exporting hardware being eligible for a 10-year income tax exemption.
It also said that computers with a defined configuration and selling below a specified price (around Rs 9,000) should have a lower tax burden.
Amendments to Section 80C of the Income Tax Act have also been proposed for households to claim deduction on the purchase of home PCs till 2010. Benefits for IT hardware parks have also been proposed.
It also said that personal Internet communicator, set top box, thin clients, mobile phones, personal digital assistants and smart phones could prove to be essential access devices for raising the IT penetration in the country.
The committee recommended the creation of an India PC programme to create affordable buying options for the population at the bottom of the pyramid and design of a no frills PC which could be a mid-term option for the country.
"To make PCs more affordable, it has to be available in the interest free regime. The committee has started working towards that end and talks are underway with manufacturers like IBM, Microsoft and Linux to bring down the prices," said Maran.
In order to ensure faster growth of PCs, the committee advised to formulate multiple financing options such as minimising the paper work through public sector banks, mandating of PC finance as a priority sector lending and special interest rates.
It also suggested running a multimedia campaign to communicate the value proposition and benefits of PCs, leading to the increase in demand for the product.
The department of IT should facilitate arranging of special rate for the print media and from Prasar Bharti and DD, advised the committee.
According to the report, the country should achieve a PC penetration of 65 per 1000 from the existing 14 per 1000 and Internet penetration of 40 per 1000 subscribers from the existing five per 1000 subscribers.
It also predicted the domestic software industry including the local language applications and content industry to grow seven-fold from about Rs 1,900 crore (Rs 19 billion) to Rs 13,300 crore (Rs 133 billion).
The report has also recommended development of multi-lingual software applications and content and imparting education through IT aids besides using technology as a means to energise rural India.
PC penetration
Five-year tax exemption sought for manufacturers of hard-disk drives, LCD panels and CD/DVD-ROM drives
Aim to raise PC penetration to 65 per 1000 from the existing 14 per 1000
Internet penetration of 40 per 1000 from the existing five per 1000 sought
Software industry including local language applications predicted to grow from Rs 1,900 cr to Rs 13,300 cr
