India PC sales to rise 27% in 04/05

NEW DELHI: Sales of desktop computers in India are forecast to surge 27 percent in 2004/05 as price cuts and growing demand from booming industries such as telecoms and financial services fuel PC sales in Asia's third-largest economy.

MAIT, a computer hardware industry body, said the sector clocked sales of 3.03 million units in the year to March, 2004, a growth of 32 percent on year, on the back of cuts in various duties in the price sensitive market.

"The duty cuts were a shot in the arm," Vinnie Mehta, executive director at MAIT, told reporters.

"But broadly almost every sector is consuming -- telecom, banking and financial services and backoffice services to name a few."

Computerization drives by the federal and state governments are also spurring sales.

In January, the government halved excise duty to eight percent on desktops, reduced the peak customs tax to 10 percent from 15 percent and removed a four percent special additional duty to boost demand in the sector.

Mehta said the cuts gave a fillip to the nascent industry as retail prices fell between 8 and 12 percent. Entry level desktops are now available between 13,000 rupees ($283) and 15,000 rupees compared with last year's levels of 20,000 rupees.

"I see no reason why in one or more years we can't touch a price point of 10,000 rupees a unit," Mehta said, adding sales in 2004/05 were seen at 3.85 million units.

Even though volume sales were robust, overall revenue for the personal computer industry grew only 11 percent to 69.82 billion rupees in 2003/04, pointing to cut-throat competition in the sector.

The main players in the Indian PC market include Hewlett- Packard Co, IBM Corp and local firm HCL Infosystems Ltd, but the industry is dominated by unbranded, cheap desktops made by assemblers working out of tiny shops across the country.

This unorganized market sells PCs at lower rates because it pays little or no taxes.

MAIT said unbranded PCs accounted for 53 percent of overall volume sales, 26 percent came from multinational brands and 21 percent sales were of Indian vendors.

Sales of printers and notebooks rose smartly as well, MAIT said.