PC imports to cost more

The Union Government has announced the introduction of an Ad-ditional Duty
under the Customs Tariff Act, Section 3(3), as a result of which, a duty
equivalent to that paid on the input parts and perip-herals by a local PC
manu-facturer, Indian or MNC, will now be levied on import of finished computer.
The rate is seven percent for a full system (CPU-box, Monitor, Keyboard and
Mouse) and six percent for a CPU—box. The Excise/CVD on inputs would continue
to remain at 16 percent.

Additionally, to prepare the industry to meet the challenge of the zero duty
regime in March 2005, the Government has abolished the customs duty on
electro-mechanical parts like cabinets, key-switches etc. from five percent, and
on from SMPS (power supply) from 10 percent to nil. This is to ensure that all
inputs are also avai-lable at nil customs duty when the cus-toms duty on fini-shed
products like PC, Monitors and keyboard is completely phased out.

MAIT has wel-comed the resolution of the impasse in the PC and periphe-rals
manufa-cturing business, which had set in after the union Budget 2004-05.
Elucidating on the impact of the measure on the PC prices, Vinnie Mehta, MAIT
Exe-cutive Director said, "There will be, practi-cally, no ch-ange in the
prices of the PCs, they will continue to remain at the pre-budget levels. The
very marginal drop in prices due to reduction in customs duty on
electromechanical parts and SMPS will be neutralized by the two percent
education cess.

However, it is very critical to develop the domestic market, and therefore we
strongly recommend that the Government con-sider incre-asing the rate of
depreciation on IT products from existing 60 percent to 100 percent. This will
not only motivate the corporate and the SMEs to invest in IT, but also subsidize
their IT purchase to the tune of 14 percent-15 per-cent, a much needed catalyst
for a price sensitive market like India."

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