PCs, notebooks to become cheaper

Economic Times
Mumbai

Prices of personal computers (PC) and notebooks are set to fall marginally following the 4% excise duty cut announced by the government.
Vendors are largely expected to pass on the benefit of the rate cut to customers because the environment is very competitive. However, the cut may not be sufficient enough to stimulate demand in a slowdown, felt vendors.

“The 4% cut will translate into a 2-2.5% drop in the prices of the final product. The difference may not be very significant for a system costing Rs 20,000, although it will be higher for servers and other products that are more expensive. If a company has a freeze on new purchases, I don’t see that being reversed because of this,” said Chetan Shah, managing director, Xpress Computers, an Intel partner firm.

Manufacturing costs for the companies have also increased by about 25% during the past six months because the falling rupee has pushed up the cost of the components, most of which are imported. “Vendors have increased the prices but not to the same extent as costs have increased. So they may choose to wait before cutting prices now,” said an industry official.

Manufacturers’ Association for Information Technology (MAIT) said desktops and notebooks would attract 8% excise duty, while all other hardware equipment would attract 10% excise, following the cut.

The impact will be most pronounced in case of supplies from direct imports and SEZs. Excise free areas, where only the cost of inputs is taxable, will also benefit, but only to extent that they will have to pay lesser excise on components now, said MAIT’s executive director, Vinnie Mehta.