Need to Buy Laptops? Go To US

By Abhishek Angad - 1 June, 2011

usa

Cost has always been a matter of concern;
be it for the vendor or the consumer.
Global MNCs look at India as a center
for cost arbitrage. Needless to say, their market
is explored to the maximum extent and the
only way by which they can realize profit is
by cutting down their costs. India is one such
destination for vendors where they can apply
this strategy. But why is it the other way round
when it comes to laptop pricing in India?

The question that arises here is that how
much is the break up for taxes and margins?
In the table below we have mentioned a price
comparison of different laptops from various
companies between the US and India of similar
configuration, which is present online.

Dell Inspiron 14R laptop, configured with i3
processor, Windows 7 Genuine Home Edition,
320 GB hard drive and 2GB RAM costs $449
(Rs 20,231) in the US but in India, the same
configured laptop costs around Rs 31,800.
This India price is without the carry case and if
purchased, would cost even more. A laptop in
India costs 30-50% more than the actual price
in the US, and this is due to high duties, taxes
and margins.

PN Prasad, former president of Confed-ITA,
questions, “There is a huge price difference
between the Indian market and the other
countries and I don’t understand why laptops
sold here are 30% costlier than the US market.
There are taxes and margins even in the US.
And I believe that laptops shouldn’t come to
India with more than 20% additional cost.”

The non-indigenously built laptops fall under 2 categories. First, imported ones which attracts 10.3% countervailing duty (CVD). Second, assembling imported components of laptops like motherboards, graphic cards, etc in a local manufacturing unit. Here, it attracts CVD, plus a special additional duty (SAD) of 4%. In India, again, hardware products have to go through different set of taxes including Central Sales Tax and VAT.
“
We manufacture the Inspiron
14R/15R in India; the laptops
are assembled at the Chennai
factory from imported parts.
The difference between the US
and India pricing is due to the
different duty structures,” said a
Dell spokesperson, And the typical
margins between direct and retail
is close to 15-20%.

 

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