Personal computer prices are likely to fall by 10-12 per cent following the government's decision to remove the excise duty on microprocessors and storage devices, according to hardware association, Manufacturers Association of Information Technology.

"With the anomaly now been rectified, PC manufacturing will thrive and PC price reduction to the order of 10-12 per cent can be expected," Vinnie Mehta, executive director, MAIT, said in a statement.

• The Mini-Budget 2004-05

This will also mobilise consumption of peripherals like monitors, printers, motherboards where there has been no excise cuts and their prices are expected to remain at the same level, he said.

The government has taken a bold step to facilitate migration of the grey market to the organised by reducing the excise duty on storage devices and microprocessors to nil, he 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, he said.

On January 8, the government had announced excise duty reductions in PCs to 8 per cent, while removing the 4 per cent special additional duty on PCs.