[tushar_j]

A point which my tinfoil brain thought up - why does the timing of this announcement coincide with a certain huge international manufacturer, which was about to make huge investments in a govt-favourite state, decide to move their investments to a non-govt-favourite state?

[kovilkalai]

Assuming that this decision is about protectionism and not security: What prevents a USA or EU from saying, let IT services employ US or EU citizens? Or for that matter, have IT ops located in countries with open markets. The problem with protectionism is that someone else can do something that will hurt us.

The more you "protect" our country from perceived dangers, the more we will be ill-equipped to tackle competition. After all, why not ignore the Olympics and just focus on National Games? The proof is in the pudding. Opening up the auto market led to HM and Premier dying. However, Mahindra and Tata emerged are successful companies who make world class machines.

[dass]

Originally Posted by kovilkalai

Assuming that this decision is about protectionism and not security: What prevents a USA or EU from saying, let IT services employ US or EU citizens? .

The cost arbitrage that India and for that matter, any third world country enjoys will ensure this may not occur during our lifespan. No one comes to India because they want to, they come here because they save money by being here and as long as that doesn't change, other countries will find any place, not necessarily India for the labor cost.

[Moto_MP]

I see a lot of comments criticizing the move because it resembles policies of 70-80s, In recent years govt. has tried several methods to promote local manufacturing, some have worked out some not so much.

Few have even pointed out that most components will be imported and only assembling will take place here - even assembling will create a lot of jobs isn't it? why is this even a issue.

Few have suggested increase import duties to make local manufacturing more competitive rather than banning - customer will pay extra for this with zero employment generated here.

We are on the top of the list when it comes to population, govt. will and must take every possible step to keep employment levels.

I see this as a desperate but very much necessary move to boost local manufacturing, whether it will be successful or not time will tell but surely this move is way better then just sitting idle and keep promoting imports just because manufacturing in the neighboring country is very efficient and we should reward them with our hard earned monies for a excellent job they are doing in supply chain etc.

[Samurai]

Originally Posted by speed79

Being an entrepreneur and running my own software products and services company since 2005, I beg to differ.

Same here, a software entrepreneur since 2004, in my second venture now.

Originally Posted by speed79

What you have listed is applicable only for the companies which are registered under STPI to avail the benefits of deferred income tax or freedom from Sales tax or something similar.

Not really. There is no income tax waiver, I pay corporate tax on profit like everyone. The waiver from sales tax or GST is available for exports, you just need to get a LUT. This is unrelated STPI or SoftEx filing. I hope you are not charging GST to your foreign client. This feature is available to exporters, so that we are not uncompetitive compared to foreign competition.

Originally Posted by speed79

The Japanese Semiconductor company that I had worked before starting my own company was an STPI registered one, and it was a pain to even take a company laptop out to home as it needed paperwork

That is only if you work inside the STP, and have bonded equipment. As NSTP registered company, there is no restriction and there are no benefits either.

Originally Posted by speed79

so when we started our company we decided not to have it STPI registered.

You have to register under NSTP category of STPI, it is available since 1999.

Originally Posted by speed79

Also, I think STPI registration restricts any sales in India.

Nope, not if you are NSTP category. I have India sales.

Originally Posted by speed79

We export our software product and sometime software engineering services and it is such a simple task. We deliver our software (product or services) via email or through FTP/shared drives. There is no need of any Softex form. We get payment credited via bank wire transfer to our bank account and get an FIRC automatically from our bank via email for each payment received.

The RBI rules are clear on this. Look at point 2 & 8 under NSTP registration in the following link.

https://www.swatikandco.com/registra...strations.html

You have no choice in the matter if you are exporting software over Internet. Get a second opinion from CA firms that have lots of software company customers.

Here is a very detailed explanation of STPI rules as it stands today: https://vjmglobal.com/fema/fema-fema...n-softex-form/

Specifically check points 5 and 10. Good Luck.

[DigitalOne]

For the nth time, this is not protectionism!

A Dell/Samsung/Acer/Apple/Asus, who makes their laptops in India, will be able to sell in India.

A Reliance JioBook imported from China will not be able to sell here.

If you want to sell in India, then Make in India. Short term pain but huge long term gain for the country.

Also for people who are worried about "substandard" laptops, you can order 1 laptop via e-commerce sites from abroad and get it shipped. No restriction on that.

[Spaced Out]

Originally Posted by Samurai

If one thought import/export is easy now, think again. Even export is rife with too much paperwork, even if there is nothing physical to ship. India is a software export powerhouse, so it all should be smooth, right? It ain't.

Your post should be a seperate thread on the challenge of exporting services. My wife recently started work as an independent consultant (non-software sector) working from home. Her clients are mostly out of India so her earnings are in GBP & USD.

We did not realize that this also requires her to get a GST number. Irrespective of your earning amount, the moment you are earning in foreign currency as a consultant, you are required to have a GST number.

However, our house owner is reluctant to give us his NOC as he fears that his property will come under commercial tax. To clarify, we have a registered lease agreement for our home.

Our CA has proposed workarounds that seem to be commonly done but are slightly in the grey area + add additional expenses. This is how doing any business in India is always walking a fine line and not always on the legal side.

The folks who make rules have not done one day of hustling to earn an honest paisa. They may well have good intentions but zero business experience & a stronger incentive to protect themselves and their authority guides them.

[fhdowntheline]

I wonder how many critical research projects/industrial projects will be held up because of this directive. Why do we have to imitate our eastern neighbor at everything that is manufactured ? I don't see such haste in driving focus on Industry/academia collaboration which will create real intellectual property for the country.

[speed79]

Originally Posted by Samurai

Same here, a software entrepreneur since 2004, in my second venture now.

Mine too is second venture, after first one closed down as an after effect of 2008 financial crisis.

Originally Posted by Samurai

I hope you are not charging GST to your foreign client. This feature is available to exporters, so that we are not uncompetitive compared to foreign competition.

No. We do not charge GST for exports. Only for local sales/service, GST is applicable.

Originally Posted by Samurai

You have to register under NSTP category of STPI, it is available since 1999.

The RBI rules are clear on this. Look at point 2 & 8 under NSTP registration in the following link.

https://www.swatikandco.com/registra...strations.html

You have no choice in the matter if you are exporting software over Internet. Get a second opinion from CA firms that have lots of software company customers.

Our CA works with couple more software companies. But I need to check this.

I asked my accounts person regarding this, and he said that since for our software exports we have license agreements, and for services we have signed contracts, that along with FIRC (as proof of income in foreign exchange) is enough proof needed by GST. Still I need to confirm from RBI.

[itisK]

I know that people don't like to hear this, but maybe sometimes, we can afford to put some faith in the group of people who have successfully navigated our economy through times like covid. On the macro level, we are doing quite well. Perhaps even better than most others. Surely they know a thing or two about how things work?

As far as this particular restriction is concerned, this is not License Raj. If you're calling it so, either you don't know what License Raj was, or you are not understanding what current restrictions are.

If you have a market big enough to leverage, you would be a fool to not take advantage of that. We can't immediately start manufacturing everything from the scratch. That won't be practical. But we've to start somewhere.

For now, I'm choosing to put my faith in the decision makers. Let's see how this pans out.

[PreludeSH]

Weren't there already extra duty for CBU laptops sold here ? In that case the added extra cost is borne by the consumer and the companies had nothing to lose. When you don't have anyone competing against them, there was no incentive for them to reduce the cost. We see this in cars and any other premium goods.

A little OT, our country will have 1 Billion employable people in a decade. There needs to be more sops, less red tape, less corruption and more investment in infrastructure to encourage manufacturing here. Else, you keep paying freebies without real investment in job growing sectors.

For all the "shiny object syndrome" that we suffer in few things like 5th largest economy, Chandrayaan etc we should look at the hunger index report. We are close to sub saharan Africa and in top 5 not-wanted list.

[svsantosh]

Dont know about computers as much but as part of the Most famous Exported Indian product - "THE Indian" - I am afraid whats will happen if other countries decide to restrict importing "Goods" they dont have locally available or not able to 'Make' locally.
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[pedrolourenco]

Originally Posted by anjan_c2007

China and South Korea

I'm glad South Korea has been added. For years now, it's only the Chinese who are branded the bad guys. From my limited interactions, I've see that Koreans harbour a deep hatred for Indians.

Originally Posted by dragonfire

Next, will they bring back License Raj?

We are going in that direction.

Originally Posted by condor

The flip side of that free market that you are referring to is dependency on other countries. Too much dependency will end up in being held to ransom. Anjan and Smartcat have better explained above why this is good.

If we have to reduce dependence, we need to locally produce stuff of an equivalent quality at a lower price or better quality at the same price. Don't force us to buy substandard products at inflated prices in the name of patriotism. We've already seen this in the car market.

[directinjection]

Originally Posted by anjan_c2007

The move targets fully built units of these devices imported from abroad and the news specially mentions about Apple laptops that are imported. The news also says such devices are being imported from China and South Korea that needs to be curbed. This move desires that the companies importing these build them here in India and avail benefits of the PLI scheme to qualify for incentives. This production linked incentive (PLI) scheme aims to boost domestic manufacturing and offer incentives to qualifying manufacturers by upto 4 to 6% on incremental sales (over base year) of goods manufactured in India. For each such company PLI benefits can be availed for five years with the base year respectively defined.

But all said and done, numerous hardware components for these devices are still imported from China and South Korea. And most the licensed softwares are too imported. So by merely packaging these imported hardwares and softwares (PLI scheme requires a threshold % age of imported vis a vis India made to qualify) can we honestly call these as "Made in India?" But its a welcome step with the rider that the Indian components need to be as "state of the art" and as reliable to the degree we are used to.

Fully agree! What is often described as made-in-India is very often just assembled in India. One can import 100% of the components from Taiwan, assemble and pack them in an Indian factory and for the purposes of law, the product becomes Indian which obviously it is not! There is a need to define the term made-in-India by law and to limit its application and use only to products that are made using a certain minimum percentage (say 75%) of Indian made components and raw materials.

[DigitalOne]

Originally Posted by pedrolourenco

Don't force us to buy substandard products at inflated prices in the name of patriotism.

You can still buy single laptops from e-commerce sites (Amazon.com, for example) and get it delivered to India after paying the import duty. No one is forcing you to buy only made-in-India stuff.