'Hardware industry is running out of time'

'Time is of essence. If the Government doesn't act fast, we will miss a great opportunity. For a competitive software sector, you need a robust hardware sector as well,' says Vinnie Mehta, Director, Manufacturers Association for Information Technology.

On his views of the Budget 2003

The budget is very positive and growth oriented. It focusses on infrastructure spend, modernisation of ports, construction of new airports, simplication of procedures for exports and imports, reduction in transaction costs and introduction of VAT by April 01, 2003. All of these send very positive signals of a conducive business climate.

On the tax holiday enjoyed by IT companies

Hardware companies do not enjoy any special tax holidays. It is at par with any other manufacturing sector.

On the incentives that were not granted in the Budget for the hardware sector

We wanted excise to come down to 16% from 8%. This would have boosted the domestic market and helped eradicate the grey market.

On whether we can achieve the $ 55 Billion manufacturing target in India by 2010

Time is of essence, if the Government doesn't act fast, we will miss a great opportunity. Also you must understand that for a competitive software sector, you need a robust hardware sector as well.

On the any likely impact of the Budget on the Outsourcing industry

Reading between the lines, it seems outsourcing services could attract service tax of 8%, but the FM clarified that it is not the intent of the Government to tax exports...lets wait for the print.

On whether the budget does enough to fuel domestic growth for hardware sector

Well, there are two aspects. If you look at the budget in totality, it has all the ingredients to fuel consumption. It is growth oriented. Had excise on hardware come down, it would have immmpensely helped...

On recent media reports about a possible Intel fab unit in India

India is Intel's second largest R & D centre out of the US. We should be able to create hygiene factors that will enable them to bring in a Fab. It is not only $ 1-2 billion worth of investment, you also need very 'clean' power and millions of gallons of clean water each day...if we enable that, they will be here. While I agree the reports are speculative, the moot point is that people have started to take India seriously. We need to convert this hot call..can we?

On fabless chip design as a new growth area for the IT industry

Fabless is the way to go as of now. We can evolve to manufacturing from there. MAIT is increasingly focussing on designs, R & D and technology exports out of India. I believe in the evolutionary cycle, from designs to prototypes to full scale manufacturing. And by the time full scale manufacturing comes, we would be infrastucture ready. I estimate the total time frame for the cycle would be 5-7 yrs

On MAIT's demands that have been met in the Budget

No excise on cell phone. This makes India ready for cell phone manufacturing, no excise on pre-loaded software, reduction in transaction times/simplification of procedures for exports and imports and compliance with IT agreement phase out are some of our demands that were met in this Budget.

On whether the Indian IT industry can make it big in R & D.

Yes we can. Innovation and new product development is the highest degree of value addition. You can create a bargaining position and command prices with it, unlike the current services scenario where there is so much undercutting. R&D is less infrastructure intensive so that's definetly the way to go. We need to encourage innovation. The Government has to become an early adopter of locally designed/made products and technology. Innovation is risky so there have to be risk mitigating factors like easy loans. It should also encourage VCs to promote this areas. We can learn from Israel and Ireland..

On whether the Government is doing enough to promote hardware manufacturing

The government suddenly realises they need to do something but then what? They haven't been able to zero upon anything. My only worry is we are running out of time. The IT Agreement hangs like a mill stone round the industry's neck. Something gotta be done..quick. Yes, hardware parks have been announced by state governments like Karnataka and Andhra Pradesh. But the moot point is if the policy/sops at the centre are not adequate, nothing will work. We need progressive hardware policy at the centre and effective implementation at the state levels. E-goverance will mean deployment of IT in huge amounts. It will give boost to local language software indutry too. It is one way of creating demand.

On the whether hardware is already a lost cause

That's a perspective. You can take a glass half full or half empty. In the technology business there is nothing like missing a bus. There will always be some bus you can get on to and steer it.

On how the decision to impose 8 % service tax will affect hardware resellers who bill for customer care services in a significant manner.

Various other services too have been brought under the tax net. I know it will hurt some of us but then someone's gotta pay.