Industry hails excise reduction and removal of SAD

The IT industry has expressed its happiness over the announcement of the Union Government to cut excise duty from 16% to 8% and across the board removal of the 4% Special Additional Duty (SAD).

Vinnie Mehta, Executive Director, MAIT says, "This is indeed a significant measure to make the domestic IT industry globally competitive. The cut in excise duty and SAD will make the organized sector price competitive vis-à-vis the gray, leading to higher PC penetration in the country and help make the domestic PC market far more attractive." 

MAIT is hopeful that its other key recommendations, which is an increase in the rate of depreciation from 60% to 100% for computer hardware will also be given due consideration by the Union Government. 

HC Tandon, Director, PCS Industries is also excited about this cut given to the hardware industry. He too believes that this move will help in reducing the gap between the organized and gray market. Also, this would greatly fuel demand as prices spiral down there would be an automatic market expansion. "The best part is the timing of this announcement, which is excellent. JFM are key sales months for the hardware industry," adds
Tandon.

KR Naik, CMD, D-Link India expressed that these concessions in the indirect taxes in a virtual mini-budget will undoubtedly come as a boon to the IT manufacturing sector. "Reduction in excise duty on PCs will make them more affordable and accelerate PC penetration in the country," he points out.

Raj Saraf, CMD, Zenith Computers believes the reduction of excise duty will herald a price drop of 10% for branded PCs. "This will hurt the gray market that used to benefit by importing goods without paying any duty. As prices drop, the volumes will increase and branded manufacturers will get an upper hand," he adds.

With the special additional customs duty being axed and excise duty being nominal local manufacturers will get competitive in the global market as they are better geared for exports. Manufacturers can now import low value and large volume IT components and stock them here while the high value components like chips and ICs can be got just in time for manufacturing.

DQCI NEWS BUREAU

MUMBAI