IT Taskforce
Basic Background  Report
8th August 1998


Self-assessment/self-declaration with Post-Audit has been described in Section III as an essential simplification of procedures. Instead of sitting in judgement over every action before it is committed, thereby acting as a serious impedance to the velocity of business, it stands to enlightened commonsense that entrepreneurs should proactively implement their projects as fast as they physically can and stand to scrutiny only after things are implemented. If they have committed any illegal act, then, they should be subject to strong punitive measures, unless it is proved that these were committed in good faith and without causing any pecuniary loss to the Government or trespassed on the rights of other citizens. If less than 10 percent of the actions are so punishable, then the country gains by allowing more than 90 percent of the actions to proceed un-impeded. In this spirit, the following further procedural simplifications are suggested for which the Task Force on IT Hardware Panel may suggest an optimal set of such measures.

  1. Licensing of capacities and production within S-BIT zone or in the S-BIT units shall be totally eliminated as has been done in the DTA. Even if total broadbanding poses administrative difficulties, a maximal set of sector-specific broadbanding should be permitted, e.g., computer hardware, peripherals, data communication, etc.

  2. Where licences are issued, they shall be on a generic basis without insisting on the part numbers, technical description of every component, etc.

  3. Exporters purchase capital goods as well as loan them from their clients. For purchase of goods, the initial bonding will be for a period of five years and for loan, a further extension of two years.

  4. In the Handbook of Procedures Volume I, para 9.7, requires the list of CG attestation by the Development Commissioner before actual import. Instead, this should be allowed without attestation, but based on original OOA subject to total value limits approved.

  5. The Customs Notification No. 133/94 dated 22-6-94, Para 6, should be amended to remove "such conditions and limitations as may be imposed by him" with respect to (i) re-export permission, (ii) returns and (iii) inter-unit/inter-zone transfer.

  6. With respect to CT-3 permission, bond should be dispensed with in view of "simple bond systems" for EPU/EPZ introduced by CBEC and make applicable to S-BIT units/zones also.

  7. GR Waiver authority shall be with the Development Commissioner under the 'Single Window concept' instead or the Reserve Bank of India.

  8. Automatic 'OFFSET' of receivables against the payables shall be allowed without the need to seek permission of the Reserve Bank of India.

  9. Where the concept of S-BIT units are extended to the formation of S-BIT zones, the Development Commissioners of the Zones who are the administrative officers responsible for the day-to-day operation of the units, shall be entrusted with the powers of the customs under Section 6 of the Customs Act so that multiplicity of agencies involved in import, export and other custom transactions can be avoided.

  10. Necessary amendments in Chapter 10 of EXIM Policy shall be brought about in respect of materials cleared against form AR-3A through factory supply to EOUs/Units in EPZs and their extended applicability to S-BIT units/units in SBIT zone from such Depots of companies against Form CT-3. This is essential to meet the velocity of business required for 'just-in-time' delivery required by the customers. Further as the Depots are now accepted as extensions of the factories as far as the definition of 'place of removal' is concerned under the amended Section 4 of the Central Excise Act, removal of goods from the Depots against Form CT-3 shall be allowed.

  11. As problems may be caused in getting permission in the absence of input/output norms and as customs in the zones often confess to not having expertise to fix these norms, it is pragmatic to dispense with the condition of input/output norms altogether from the EXIM Policy.

  12. Labour Laws: IT product Industry, by its very nature, depends heavily on the women work force. As this is one of the best and lucrative areas for large scale employment of women and in order to protect the employment prospects of women workers, Labour Laws have to be amended to meet the essential requirements implied by the highly competitive IT products industry. As the Indian IT product industry will increasingly have to compete with countries like Taiwan, Singapore, Korea and Philippines, the Indian Labour Laws in this limited sector should not be adverse as compared to the Labour Laws in the competing countries. Similar observations apply also to male workers. In view of this, the following modifications in the Labour Law specifically applicable to the IT Hardware manufacturing sector, shall be enacted with full consideration of the ILO specifications.

  • Women shall be allowed to work in three shifts subject to provisions of all the ILO specified conveniences including transportation from and to the door steps of the employee.

  • Temporary status shall apply for 720 days out of the 3 years instead of 240 days out of one year.

  • Flexibility to retrench the labour force, in the face of justifiable causes arisen from market forces, upon payment of appropriate compensation fully in line with the ILO specified norms.

  • Flexibility to operate 10 hour shifts without over time subject to overall limit, compensatory leave and other 120 specified norms

  1. In a fast obsolescent industry characterised by sudden changes in crises as well as in relative competitive positions, speed is the name of the game. Accordingly, a number of associated procedural modifications are necessary to achieve a high velocity of business:
  • For 90 percent of the import clearances, physical presence of Customs Officials is not necessary.

  • Monopoly in Cargo handling shall be removed.

  • Raise the limit on invoice through bank from the current US $ 25,000 to US $ one million for imports.

  • Requirements of 'country of origin' in LC shall be abolished.

  • No permission shall be required for export of samples.

  • Replacing of return goods shall be made only through self-assessment.

  • All surplus items can be disposed on payment of full duty without permission.

  • Cargo handling agency should be held responsible for clearing the consignments within 24 hours of landing. Punitive measures and fines shall be imposed in cases of delay.

  • The Freight Forwarders/Clearing Agents shall be allowed space within the Cargo terminals in a bonded area to allow for the freight consolidation of export.

  • Customs shall function for 24 hours a day and 365 days a year without break.

  • There should be no cooling off period.

  • All returns from Customers shall be on the basis of self-declaration only.