The Hindu Business Line : Hardware sector hails duty cut

Due to the Government's decision to reduce excise duty from 15 per cent to 8 per cent, PC penetration is set to increase and the target of 3 million units of PC sales in 2004 has become more attainable, observed industry sources.

Hailing the move as long-awaited, Mr Vinay Deshpande, Vice-President, MAIT, told Business Line, "It will make computers more affordable so that we can see more volumes in sales and PC penetration. This would also provide a fillip to the manufacturing sector, which has not received much incentive so far."

According to him, the Indian manufacturing sector could move to the next level of manufacturing with production of power supply cables and keyboards. Mr C.M. Gaonkar, Director-Finance, D-Link (India) Ltd, said computer hardware manufacturing companies in India would be "able to sell computers at a cheaper rate to the end-consumer. We would also like the Government to give special status to the hardware sector just like they have for the software sector."

The duty cut would bridge the price differential between the branded computers and products available on the grey market. According to Mr Bimal Raj, CEO, Allied Digital, the disparity between the establishd brands and unbranded products has dropped to 4 per cent from the 8 per cent rate earlier.

"It will eliminate the grey market since the consumer will be willing to spend a little extra to buy a good branded product from an established company," Mr Raj said.

Moreover, the ITES and BPO segment would benefit immensely from the reduction since these segments are hit by the heavy cost structure of IT infrastructure, observed Mr Naresh Gupta, MD, Adobe India.

The next logical step for the Government would be the reduction of customs duty to zero, opined industry players.

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