Union government removes excise duty on components

DQW Bureau
New Update


Zero duty on microprocessors and storage devices

On Jan 8, the union government’s decision to reduce the excise duty on PCs

to eight percent from the earlier 16 percent was hailed by some of the major PC

vendors. But some sections of the IT industry took it with a pinch of salt, as

there was no reduct-ion on the duty of components.

But the recent announce-ment of zero excise duty on microprocessors and

storage devices–HDDs, FDDs, CD Rom drives from the earlier 16 per-cent to nil–

has brought back the smile.


Congratulating the union government (in a press release), Vinnie Mehta,

Executive Director, MAIT, said, "The government has rectified a major

anomaly that had occurred due to the recent reduction in excise duty on

computers. This reduction was limited only to finished systems and not extended

to input parts and components, which had resulted in CENVAT credit overflow for

the PC manufacturers and rendered PC manufacturing unviable."

"With the anomaly now been rectified, PC manufacturing will thrive and

PC price reduction to the order of 10-12 percent can be expected. This will also

mobilize consumption of peripherals like monitors, printers, motherboards, etc,

where there has been no excise reduction and their prices are expected to remain

at the same level. Further, the government has taken an agressive step to

facilitate migration of the grey market to the organized, by reducing the excise

duty on storage devices and microprocessors to nil," he added.

According to Kishore Jaswani, Director, Pacific Infotech, "Now, the

market is open and wide and anybody can import the components. It is also good

that the grey market will get hit and we can now gain their market share



In the words of another assembler Satish Villait, Director, Bitsy Infotech,

"This will narrow down the price gap between the MNC brands and local

brands. Overall, the mini-budget is confusing."

There are others like Suresh Joshi, the newly-elected President of Pune CMDA,

who feel that a lot of the local channel players will get themselves registered

to become an excise paid firm encouraging imports into the country.

At other small cities like Ankleshwar and Bharuch, the channels are

completely confused about the situation and are wondering about the stocks lying

in their godowns.


But a major issue that’s cropping up is that now everybody is holding

stocks, according to rumor rounds in the market. Some major vendors who already

have huge stocks with them are not implementing the new excise duty as they

might end up in huge losses.

DQW News Bureau