This story is from March 3, 2006

Hardware set to get a big boost

Sufia Tippu / TNN / Mar 3, 2006, 00:27 IST

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A 12% excise on personal computers - the second part which says it is Cenvatable brings a huge relief to PC manufacturers.

BANGALORE: Taking a cue from the Union IT minister, who has taken a strong pro-hardware stand, P Chidambaram has also flagged off the IT manufacturing mechanism in a big way.
Though the first part of his sentence says the unthinkable �� a 12% excise on personal computers (PCs) �� the second part which says it is Cenvatable brings a huge relief to PC manufacturers.
PC manufacturers were divided on the issue of price hikes. As it stands now, local brands may not see any price impact while MNC brands may raise prices by 4-5%.
Contrary to popular belief, imposition of excise duty on PCs will have very minimal impact on computer prices due to availability of CVD setbacks.

"I believe this is an extremely good move because fully imported PCs and laptops will be costlier because they would carry an excise of 12% and 4% CVD. Making them here would be more beneficial, " says Ram N Agarwal, MD & CEO, WeP Peripherals.
Earlier, a fully imported PC or a laptop carried nil excise duty but a CVD of 4%. Now, it will carry a 16% duty. According to Raj Saraf, CMD, Zenith Computers, "The Rs 10,000 PC will only be a dream."

Interestingly, it is the SSI sector (smaller systems integrators) which would also benefit. "When an SSI assembles without an excise licence he falls in the grey market segment.
Now this has been addressed and the systems integrators can also manufacture and claim credit against imports," said Alok Garodia, MD, Jupiter International.
The announcement on a new semiconductor policy for manufacturing semiconductors, assembly, testing and packaging of Semiconductors, LCDs, storage devices, is seen as much awaited move from the government.
Says Vinnie Mehta, ED, MAIT: "With the Indian ITC market attaining global scales, such a policy announcement is indeed very timely and will usher in a new era of IT manufacturing in the country."
K Jayaraman, CMD, Hathway said: "With the reduction in the customs duty from 15% to nil, DTH will grow faster.

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