PCs to be cheaper by Rs 3K-5K

NEW DELHI: Keeping in view the WTO agreement of a zero duty regime from April 2005 in the hardware sector, the Finance Minister, P Chidambaram today announced 100 percent excise duty exemption on computers. The minister also announced that Braille computers would be fully exempted from customs duties.

While this may not have come as a major surprise to many, the Indian hardware sector and PC players are more than happy with the decision. According to HCL Infosystems CEO and chairman Ajai Chowdhry, the industry is happy with the finance minister's decision to reduce excise duty from eight percent to zero percent on PCs, including parts used for PC manufacturing. "This step assumes even more significance as it has come ahead of the WTO zero duty regime. This is a very positive step and will definitely help the organized sector in making more investments in manufacturing," He said.

Welcoming the move, MAIT executive director Vinnie Mehta said that it would help increase the PC penetration to a large extent. However, he also mentioned that there is not much clarity on the duty being levied at the component level. "We are waiting for the notification, because if there is duty at the component level, then it will not help the overall cause of keeping the price point of a PC in control," he added.

"We wholeheartedly welcome this move by the government. This is now going to herald a new era of PC penetration in the country. PC will be more affordable now not only in B and C class cities but even in smaller cities," quipped LG Electronics IT products sales and marketing deputy general manager, R Manikandan.

The government's decision to reduce the excise duty comes at a time when the industry is moving full steam to increase the penetration of PCs in the home and the SME sector.

Echoing similar thoughts TCS executive VP, Phiroz Vandrewala said that overall it's a very positive IT budget. "It is a good attempt to reach out to the larger section of the society. The IT sector had no major expectations from this budget. We just wanted the finance minister to maintain the status quo. Some operational issues still remain and we have been assured that they would be looked into very soon. The abolition of excise duty on PCs will surely give a fillip to the domestic industry and the IT industry will grow at 30 percent to 35 percent next year," he added.

As per a recent study by MAIT and IMRB, desktop PC market in fiscal 2003-04, grossed 30 lakh units registering a growth of 32 per cent over the previous fiscal. PC sales are expected to cross 38 lakh units in fiscal 2004-05. Assembled PC account for 53 per cent of total PC sales in 2003-04.

Earlier this year the government had brought down the excise duty on PCs from 16 per cent to 8 per cent while the custom duty on cell phone handsets was reduced to 5 per cent from 10 per cent. This had brought down the price of computers and laptops by around Rs 1500- Rs 2000, while cell phone prices dropped by around Rs 1,000. Now with the zero duty regime, the price will further dip down to anywhere between Rs.3000 to Rs.5000.

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