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Hardware
Computer hardware: Big boost
Krishnan Thiagarajan
For the computer hardware industry a big positive has been the rollback in the Information Technology Agreement under the World Trade Organisation, which is to usher in a zero-duty regime from 2003 to 2005. This is slated to impart greater certainty into the domestic manufacturing plans of PCs by such players as HCL Infosystems, Zenith Computers and Wipro's hardware arm.
Retaining the import tariff differential between finished computers and inputs for PCs at 15 per cent is another step forward. However, there will be no immediate and significant price cuts for PCs. With the existing hardware players slated to build higher manufacturing capacities in future, they may be better placed to compete with the grey market that is represented by assembled PC makers. These developments may only be a driver of near term sentiment in stocks such as HCL Infosystems. However, any sustainable rise will hinge on the announcement of new manufacturing plans or financial performance of the subsequent quarters.
The computer hardware industry may also be an indirect beneficiary of the reduction in the import tariffs on capital goods to 15 per cent (from 25 per cent in 2001-02) used in electronic components such as PCBs, resistors, oscillators, etc, and nil rates of import tariffs announced for 47 new dual user items used for the manufacture of those electronic components. If a vibrant electronic component segment is created, it could prove the trigger for an entrenched hardware industry in the country.
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