The finance minister has proposed to "fully exempt" from excise duty DVD drives, flash drives and combo drives. This should bring down the prices of these entertainment and storage devices.

The finance minister has also announced that he will promote India (with the necessary resources) as a "preferred destination" for the manufacture of flat LCD/OLED/Plasma panel displays and storage devices. This should eventually benefit the customer.

Domestic pressure on computers

The government had exempted computers from excise duty to boost the use of computers. "That purpose has been largely served," opined Chidambaram. Bowing

to pressure from domestic manufacturers, the finance minister has sought re-imposition of excise duty at 12 per cent to enable them  to take CENVAT credit as well as to face competition from  imports.

Result: Since the 12 per cent excise duty will be eligible for full  input tax credit, there should not be any impact on price.

Packaged software to get costlier

The government has proposed to impose an 8 per cent excise duty on packaged software sold over the counter. Customised software and software packages downloaded from the Internet will be exempt from this levy.

Result: Computer games, Windows software, and other packaged software will be costlier.

Sops for IT-enabled services

With information technology and IT Enabled Services making the headlines, it was not  surprising to hear the finance minister say that "the time is ripe to make India a preferred destination for the manufacture of  semiconductors and other high technology IT products".

To achieve this goal, the ministry of information technology will shortly announce a policy. The government has proposed to use the existing vehicles of viability gap funding and the India Infrastructure Finance Company Limited to create a window to provide equity participation and/or viability gap funding to the new ventures. The window will be open for three years in order to accelerate investment.

Tele-density to increase

The telecommunication sector in India is recording one of the fastest growth rates in the world. Tele-density stood at 11.75 per hundred at end-January 2006. The target is to reach 250 million connections by December 2007, and the finance minister said he was "confident of success".

He has proposed to provide Rs.1,500 crore (Rs 15 billion) from the Universal Services Obligation Fund in 2006-07 towards this end.

Set-top boxes
DTH players who are planning to enter the market may breathe easy. While an excise duty of 16 per cent has been levied on set top boxes, the government has simultaneously reduced the customs duty from 15 per cent to NIL.
Result: The change should be minimal.

Briding the digital divide
More than 50 million rural connections will be rolled out in three years and, thereafter, a connection will be available on demand. The digital divide between rural India and urban India is expected to be bridged. To extend financial support to infrastructure for cellular telephony in rural areas, the minister of communications is expected to introduce a Bill in the budget session to amend the Indian Telegraph Act.