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Assembled PC firms boot out branded peers
March 28, 2003 15:38 IST
The unorganised personal computer makers are steadily eating into the market share of their peers from the organised sector, given their cost advantage.
The unorganised sector's market share has increased to 63 per cent in the third quarter of this fiscal, from an already high share of 50 per cent during the first quarter of the fiscal.
To make matters worse for the organised sector, the total size for desktop PCs has also shrunk by 2.3 per cent during October-December on a quarterly basis.
These results were on Thursday announced by Manufacturers' Association of Information Technology, the apex body of the domestic IT hardware industry, as part of its industry performance review for the third quarter of this fiscal.
The primary reason for the presence of the unorganised sector, MAIT says, is the big difference in prices of PCs sold by the organised and unorganised prices. An excise component of 16 per cent on branded PCs makes these products highly uncompetitive against the grey market PCs.
MAIT also feels the latest Budget has done little to solve the problems of the organised players, which have to bear an additional excise burden of 16 per cent, unlike the grey market.
Vinnie Mehta, executive director, MAIT said, "There is a pressing need to bring down the prices of IT products to ensure that IT reaches grass root levels in India. MAIT would continue to press for reduction in excise duty, as it is the key to eradication of the menace of the grey market."
He said, "The increase in the number of imports of cell phones through the legal channel is a key indicator of the government's success in tackling the issue of grey in case of the cellular industry. The Centre has abolished the excise/CVD in case of the cell phones. A solution on similar lines is the need-of-the-hour for the IT industry as well."
MAIT estimates that the government loses around Rs 500 crore (Rs 5 billion) annually owing to non-compliance to excise duty by the grey market.