It was a move that was bitterly contested, when first proposed back in 1995. But now the Indian IT industry can no longer defer its implementation. Come January 2005 and India will have to implement the clause which will bring the custom duty on all imported IT products to zero, as per the WTO’s Information Technology Agreement.
p____p To bring more clarity on the subject and help partners get into a state of preparedness, 360 Magazine decided to focus on the impact of the zero duty rule in its Third Anniversary issue. While researching the topic, one fact outshone through, Indian IT industry was no longer apprehensive about facing the competition this move would bring on.
p____p Overcoming the insecurities that prevailed earlier, which led to the postponement of the agreement thrice, this time round IT players have a positive outlook. The concern that the opening of the Indian market would result in unfair competition, is now replaced with the hope that zero duty regime will give domestic manufacturers an opportunity to explore international markets. With India being one of the few markets that has a robust growth rate, local manufacturers are confident that there will be room enough for all.
p____p There is also talk of exploring the idea of developing India as an IT manufacturing hub, provided it has the necessary support infrastructure in place. Then, there is the expectation of the complete revival of the IT market. The overall belief is that more imports will lead to lower prices, which in turn will expand the market significantly.
p____p The implementation of zero duty will have a tremendous impact on the way business is conducted. For the partner, life will get easier. The channel will be in demand as companies vie with each other to gain the customer’s attention. Partners will not only have a wider range of products to sell their customers, they will also get proactive support from the manufacturer, by way of marketing and service support, all with the aim of ensuring marketshare.
p____p In a characteristic move, the industry has managed to turn a weakness into an opportunity. The next few months will see the creases getting ironed out, as manufacturers and channel partners work together to work out the strategy needed to survive post January 2005.