Duty cuts get mercurial

MUMBAI: One-and-half month after the Government announced duty cuts for IT components, the scenario on price-front has only got a little better. The full benefit of the price cuts have not yet reached the last tier of channels. Huge inventory of components and peripherals lying with the distribution channel is to be blamed.

The highest price reduction was expected for CPUs, FDDs, HDDs and CDROM drives, on which counter-veiling duties (CVDs) were completely abolished. But, the price of CPU with Hyper Threading capabilities remained unchanged at the time of going to the press. This had actually dropped by around 3 percent in the second week of January but bounced back to its original level "due to market dynamics," says a sub-distributor. However, the prices for Celeron 1.7 and 2.0 GHz processors dropped by 8 percent. AMD's Athlon 2100 XP processor dropped by 6 percent as on February 7.

The prices for FDDs, CDROM drives and HDDs, also dropped by 10 percent, 9 percent and 8 percent respectively against an expected price drop of 15 percent in each category.

According to market feedback, the prices will drop to its fullest by February-end, when fresh imports for all the components are expected. As of now, distributors are averaging the prices and minimizing their losses caused by the reduction in prices for the existing stocks.

An unexpected and huge price drop came in the motherboard category where prices dropped by around 14 percent, while the expected drop was only 6 percent. This price drop was mainly seen in Pentium-4 supporting 845 and Via chipset-based motherboards of all vendors like Mercury, His and Intel.

Another significant drop happened in the CD Writer/Combo drives category, where prices dropped around 7.5 percent, while it should have actually got a price reduction of only three percent.



What has been disappointing is the miniscule drop in the monitors where the price has dropped only by 1-2 percent, against an expected price reduction of 6 percent.

CyberMedia News