The Telegraph
Since 1st March, 1999
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PC’s PCs go from cheap to cheaper

Delhi/Bangalore, July 8: Personal computers could become cheaper, if only by Rs 500-700.

Finance minister P. Chidambaram abolished the 8 per cent excise duty on PCs, lifting the mood of the infotech industry, which is also pleased with the thrust on technical education and the setting up of the National Manufacturing Competitiveness Council.

The scrapping of excise duty, the industry hopes, will close the gap between the grey market and branded products and increase IT penetration.

“Considering that the government is set to adhere to the April 1, 2005, deadline to abolish customs duty on all IT-related imports, the decision now to abolish excise duty is definitely a healthy sign to encourage local manufacturing,” said W.S. Mukund, managing director of Acer India (Pvt) Ltd.

Chidamabaram’s decision to upgrade 500 ITIs at the rate of 100 every year has been applauded. Mukund said it would create a more empowered workforce.

The industry hopes the incentives would encourage multinational companies such as IBM, Dell and Hewlett Packard to establish hardware manufacturing bases in India.

Suresh C. Senapaty, CFO and corporate executive vice-president (finance), Wipro, said: “Doing away with excise duty on computers can spur demand and help improve IT literacy in the country.”

Nandan Nilekani, CEO and president of Infosys Technologies, added that it would help education and improve productivity.

MAIT, the apex body representing the hardware, training and R&D services sectors, welcomed the budget. Executive director Vinnie Mehta said: “The reduction in excise duty will have the positive impact of abolishing the grey market and make IT products from the organised sector price competitive. We believe that this will help deepen the existing market and improve IT penetration in the country.”

Mehta also praised the “impetus to upgrading technical education (ITI)”, saying it “will lead to better quality manpower for the sector”.

The buzz in the industry was that PC prices could dip by Rs 500-700, but some companies advised caution.

Mukund said: “The impact on end-user price points cannot be commented upon yet, as we await clarification on Cenvat credit on account of CVD paid for imports of components.”

Mehta added that he wished “a similar measure (duty abolition) were also adopted for IT peripherals as a consumer today buys a package — PCs and peripherals together — rather than a standalone system”.

Balu Doraisamy, managing director, HP India Ltd, said he expected the gap between the “branded and the unbranded technologies to further reduce”, but added: “We need to study the budget in its entirety to be able to define the exact quantum of the price reduction.”

But not everyone was as cautious. Ajai Chowdhry, CEO and chairman of HCL Infosystems, said: “We can look forward to increased PC penetration as PCs will become more affordable.”

Sanjeev Keskar, country manager, AMD Far East Limited (India), said: “The incentives will make PCs household devices.”

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