The Hindu Business Line : Hardware measures -- PC prices seen unchanged

THE Finance Minister may have announced a slew of favourable measures for India's hardware industry aimed at creating a conducive manufacturing atmosphere, but home buyers and corporate customers will not benefit from any price reduction of PCs and other IT products because of the budget.

For once, the Finance Minister, Mr Yashwant Sinha, paid heed to the woes of the hardware industry and reduced customs duty on several specific IT products and capital goods, meeting a long-standing demand of this troubled sector.

He has also agreed to postpone the implementation of the Information Technology Agreement (ITA) of the WTO to 2005 instead of 2003, giving domestic manufacturers two more years to prepare for a duty-free regime.

However, such measures will not result in prices of PCs and other hardware products coming down since Mr Sinha has slashed the customs duty to 10 and five per cent on 17 items like sound and image storage devices.

``This duty reduction will not impact the prices of PCs and our other products. So I don't see any price reduction,'' said Mr Ajai Chowdhry, Chairman and CEO of HCL Infosystems.

Most components of IT products such as PCs and peripherals are already in the range of 0-5 per cent. Also, there has been no reduction of excise duty of such products which remains at 16 per cent.

According to Mr Vinnie Mehta, Director of MAIT: ``The inverted tariff structure being faced by the domestic hardware manufacturing industry has been rectified with these measures,''

Earlier the import duty on capital goods and certain input components was higher than the peak rate of 15 per cent import duty on finished goods. ''A long-standing issue of the hardware sector has been now addressed,'' he said.

The industry has also hailed the decision to implement the ITA of the WTO in 2005, saying that the industry was under severe pressure to face up to the zero duty regime in 2003.

Meanwhile, companies such as Cisco, who do not manufacture in India, are disappointed that the Finance Minister has agreed to postpone the zero duty regime to 2005.

``There are some products which are not manufactured in the country and you need to import them. This move will put considerable burden on those who want to leverage the Internet as they will have to import products like routers till 2005, paying 39 per cent import duty,'' said Mr Manoj Chug, President of Cisco Systems India and SAARC.

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