The various telecom associations are likely to raise the demand in their pre-budget memoranda to the finance minister.

In its second report on hardware, the Prime Minister's task force on information technology has recommended specific steps to give a fillip to domestic manufacturing of IT and telecom equipment. The report has run into rough weather with the finance ministry raising several queries on the revenue aspects. Hence, cabinet approval is likely to be delayed.

Telecom industry sources point out that since most of the basic and cellular telecom companies are in the process of setting up their networks and expanding right now, they should be allowed import at nil duty by the government for at least two to three years. Theimplementation of the task force report and setting up of manufacturing facilities will take that long, they point out.

The industry will also seek deemed export status for local manufacturing and rectification of anomalies as there exists a negative differential between the finished goods and telecom equipment parts.

Sources added that the industry is also likely to put up the existing demand for zero duty import of software in a big way.

The IT task force had recommended zero duty import for IT software. Industry felt that since telecom software was not different from IT software, it also qualified for similar treatment. Most of the equipment being deployed by the telecom companies being digital in nature and fully controlled by software, even their operating systems have to be specific to each system, they claim.In fact, the telecom associations have been complaining for past few months that the their member companies were being levied heavy duty by the customs authorities due to difference ofopinion in interpretation of what comprised telecom software.

Custom's notifications issued in June and July 1998 had classified telecom software as one that can be recorded on a machine-readable form, is capable of being manipulated and provides for interactivity to users by means of an automatic data processing machine.

Industry sources pointed out that all digital telecom equipment falling under the government's July notification are also part of the Information Technology Agreement of the World Trade Organisation (WTO). Therefore, software used with these equipment too ought to be classified as IT software.Software is used, for instance, in machines like base station controller, transcoder, base transceiver station and main switching centre which are required to setting up the basic services network.

"The software for these machines is imported on a machine-readable format such as CD-ROM, floppies and magnetic tapes and loaded on the data-processing machines which are micro-processors with memory ordynamic random access memory," said a company executive, while alleging that the customs department had been slapping huge duty on import of such software due to their ignorance.

"This software is after all loaded into the RAM (random access memory) just like any computer software and remains there as long as the equipment remains powered. It is quite different from the erasable programmable read only memory which is resident on the hardware. This software is etched or embedded on the EPROM,".

Further, telecom software shipped along with the equipment to the operator consists of an operating system and certain application packages which are required to carry out several basic functions such as call processing and management, system integration, voice encoding and decoding processing and subscriber database management. It requires necessary manipulation by the operators and provide interactivity to the user, they say. The demands are also likely to be put up by the industry to the group on telecom forconsideration.