Tough times ahead for Hardware sector

NEW DELHI: Post-2005, all IT manufacturing, including PC assembly, may exit India, with no incentive left for the segment, according to hardware body MAIT. And, the reduction of customs duties on IT products to zero by that time, in line with the WTO commitments will not help.
For quite sometime now, hardware proponents have been urging the government to address the issue of high taxation.They feel the country has missed the hardware bus. The excise duty at 16 per cent is the single largest tax component and should be reduced to 8 per cent, feels the industry. Reduction in excise is expected to bring down prices by at least 8-10 per cent.
MAIT says this can fuel market growth by 30-35 per cent from the current 20 per cent. It will also help business migrating from grey to the organised sector. It estimates that the government loses almost Rs 500 crore annually due to the non-conformity to excise duty by the hardware sector.
India has a PC population of just about 9 per 1,000 people, compared to the global average of 28 per 1,000. The primary reason for this is the prohibitive cost. Nearly one-fifth of the costs of a PC is due to the unfriendly tax regime.
Gartner Dataquest says, “India, PC market outlook 2003�, forecasts strong volume growth this year, but with stretched margins. The research group had earlier predicted PC shipments to increase 18 per cent this year following the 12 per cent growth in 2002.