Exporters of electronics  and infotech hardware may get a 10-year tax holiday. According to the draft of the National Electronics/IT Hardware Manufacturing Policy, prepared by the government, this will help promote India as a key hardware manufacturing destination.

To encourage domestic production, the draft also proposes to exempt the import of capital goods and raw materials needed for the manufacture of electronic components from Customs duty.

The policy also envisages a core group, representing various ministries, to look into the problems of electronics and IT hardware exporters.

Further, sales tax and the proposed value-added tax on all electronic and IT products, including components, will be fixed at 4 per cent, while the special additional duty on imports will be phased out.

The policy also proposes special incentives, similar to those given to special economic zones, for hardware parks in the private sector, like duty-free facilities and income-tax benefits under Section 80IA.

To attract global chip manufacturers like Intel to India, companies would be given cash subsidy and tax incentives, the draft proposed.

The policy, prepared with an eye at promoting an export-oriented hardware sector,  also suggested an export plan that would help identify target countries and products.

"Market requirements of various countries should be matched with the products offered by Indian companies," the draft policy suggested.

Moreover, the annual depreciation allowed on computers would be raised to 100 per cent, against the present 60 per cent.

The policy also aims at creating an environment that will encourage global manufacturers to relocate their manufacturing plants to India.

It suggests that steps would be taken to encourage global manufacturers to outsource from Indian hardware companies.

"Global manufacturing companies would be approached in a proactive manner to enthuse them in setting up and augmenting their Indian operations.  Special incentives would be offered, based on the value addition and volumes of exports.  This will provide an impetus to component manufacturers for modernising their facilities and moving up in volumes of production," the policy said.

New policy

• Import of capital goods and raw materials needed for the manufacture of electronic components to be exempted from Customs duty.
• A core group, representing various ministries, to look into the problems of electronics and IT hardware exporters.
• Special incentives for private sector hardware parks proposed.