The Hindu Business Line : Hardware sector to pass on tax relief gains

New Delhi, Dec. 7 The IT hardware industry said on Sunday that it is awaiting the detailed notification of Government’s announcement on Cenvat rate cut, to assess its impact on prices of computers and notebooks.

The apex association, Manufacturers Association for Information Technology (MAIT), said that while it would comment in detail after going through the fine-print, the four per cent reduction in Cenvat rate could bring relief on peripherals products such as TFT monitors, printers and projectors.

“Some items other than computers may enjoy the new lower rate, but as far as computers – both desktops and notebooks - are concerned, we will wait for the detailed notification. The IT industry has always passed on the benefits to its consumers, and it would do so this time as well, if the outcome is favourable,” MAIT Executive Director, Mr Vinnie Mehta, said.

Earlier in the day, as part of measures to stimulate the economy, the Government announced that an across-the-board four percentage point cut in the ad valorem Cenvat rate would be effected for the balance part of the current financial year on all products other than petroleum . Currently personal computers attract a 12 per cent Cenvat rate, whereas the rate on input components vary from 0-14 per cent.

When contacted, Mr S. Rajendran, Chief Marketing Officer, Acer India, said while the decision is likely to bring down prices on fully imported products including notebooks, its impact on prices of manufactured items such as desktop computers would depend on the synchronised effect of the cut, across the manufacturing value chain. “The impact on prices will depend on the extent of Cenvat overflow, depending on the configuration of a system. We need to clarify these things before commenting on the impact on prices of manufactured items,” he said.

Industry observers also pointed out that the last three months had seen some slowdown in demand. “There is a channel inventory that is priced on the old rates. Since the effect of today’s decision will be on fresh stocks, a rate cut may not be so immediate,” they said.

Most industry officials were not available for comments despite repeated attempts.

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