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Tuesday, Jul 13, 2004

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PC excise duty exemption anomaly to be rectified soon

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The Finance Minister, Mr P. Chidambaram, addressing the CII National Council members in the Capital on Monday. — Kamal Narang

New Delhi , July 12

THE Government on Monday assured the IT hardware industry that the anomaly relating to Budget announcement of a full excise exemption on personal computers (PCs) would be rectified soon.

Addressing captains of the industry here, the Finance Minister Mr P. Chidambaram, said that issues being faced by computer industry post-Budget have been brought to his notice, and assured the players that the problems would be addressed shortly.

The Minister's assurance is expected to come as a relief to the hardware industry, which has been reeling under the implication of full excise exemption on PCs without any change in countervailing duty (CVD) on components and inputs that go into manufacturing a computer.

PC players get a tax benefit, which is the difference between the duty paid on importing inputs and components and the excise levy. In a case where the CVD on inputs and components remains unchanged while the excise duty on PC is exempted, this advantage is taken away.

The industry fears that Budget announcement has led to a situation where an imported PC could be up to 8 per cent cheaper than a made-in-India PC, thus dealing a severe blow to manufacturing operations of PC players.

The hardware industry has also sought a meeting with the Finance Minister to discuss the issue.

Currently, as much as 90 per cent of the market comprises PCs that are either assembled or manufactured in India, while only 10 per cent is that of imported PC.

If left unaddressed, the anomaly could reverse this ratio, as PC companies, especially the MNC players may find it attractive to import computers, industry sources said.

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