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INTERIM BUDGET
IT firms feel good
Tribune News Service
THE
Government has encouraged private consumption through a reduction in
customs duty on cellphones, computers and electronic goods. With an
attempt to woo the urban middle-class to spend more, the Finance
Minister has announced a combination of import and excise tariff
reductions in computers, cellphones, electronic goods and consumer
durables. For instance, a lower excise duty, a long-standing demand of
the computer hardware industry, has finally come through. The reduction
in personal computer prices by at least 8-10 per cent is expected to
give a boost to PC and Internet penetration.
Commenting on the interim
Budget, R. Manikandan, Deputy General Manager, Sales and Marketing, (IT
Products), LG Electronics says this is going to effect the entire IT
segment to some extent because the excise duty is being reduced on hard
disk drives, keyboards, mouse, floppy drive, CR-ROM and monitors. But
CPU, cabinets, SMPS, speakers, RAM (memory), LAN Cards, hubs, switches,
motherboards, UPS and headsets still carry the tag of 16 per cent excise
duty. "This will benefit branded PC makers because the PC
components will also be available at a much reduced price thereby
reducing the cost of manufacturing. This will also help them to be able
to penetrate the market easily. More customers will be taking advantage
of this reduction in prices and avail the branded PCs."
Manikandan says the
reduction of excise duty will be a fillip for genuine manufacturing.
There will be a price drop of 10 per cent for branded PCs and this will
hurt the grey market that used to benefit by importing goods without
paying any duty.
Mr Arun Bhattacharya,
Executive Vice President, PCS Industries, says the IT industry has
received its incentives for this financial year already when excise duty
and custom duty were dropped. "The government had met a long
standing demand of the IT manufacturing industry in the January
announcement. The cut in excise duty will make the organised sector PC
price more competitive vis-a-vis grey market and will lead to higher PC
penetration in the country. This will make the domestic PC market far
more attractive. The various other changes in duties on capital goods
and raw materials will also help the IT industry."
Mr Shanmugam Nagarajan,
founder and chief operating officer, 24/7 Customer avers: "We
believe that
whether a service is core or auxiliary or ancillary, it should not be
charged. This is in reference to the CBDT tax implications where it is
mentioned that core services outsourced is taxable. Since there is no
distinct definition of core v auxiliary, it is not clear as to what type
of services this applies to. However irrespective of the type of
service, foreign companies should not be taxed. This would promote the
growth of outsourcing to India and also prevent any barrier to
outsourcing in the existing environment."
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