Rationale for 4% SAD is questionable Most IT parts and components are imported. Low volume consumption in India does not justify local manufacturing of parts and components. SAD makes finished products manufactured locally in the organised sector uncompetitive vis-a-vis imported finished products. Domestic manufacturers pay sales tax when products are sold to distributors. Importers pay no sales tax. Domestic manufacturers already pay sales tax on components sourced locally for which they are not compensated. Cost of doing business in India is high. This is because of factors like high interest rates, poor infrastructure and need for power backup.
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