“Once it becomes clear that it’s cheaper to assemble PCs in India, almost all manufacturers will invest and expand manufacturing facilities in the country”
S RAJENDRAN CMO, Acer India
including motherboards and chassis. At present only microprocessors and hard drives attract 6 percent CVD.
Besides, MAIT recommends that the Special Additional Duty be removed from all components used for manufacturing.
Over the years the government had kept a lower duty structure for ICs and hard drives which are not manufactured in India while keeping higher duties on motherboards, memory modules and other PCB-based products as well as products such as chassis. This was done because there existed, at least on paper, a potential for manufacturing motherboards, memory modules and chassis in the country. However, with nearly 50 percent of the cost of a computer accounted for by the processor and hard drive, the benefit of sourcing motherboards and memory locally does not exist for the manufacturer.
“Some of the theories that we could have been a great base for manufacturing computer chassis have proved to be wrong,” argues Rajendran. “While India is rich in mining and produces iron ore, we have not been successful in creating the right quality sheet-metal for manufacturing chassis at reasonable prices.”
Hence he feels the first step which the country needs to take is to reverse the duty structure. “Once it becomes clear that it’s cheaper to assemble laptops, desktops or tablets in the country then almost all manufacturers will invest and expand manufacturing facilities here.”
After the local assembling starts most manufacturers will look for sourcing some of the products locally. “Remember, logistics is a huge factor,” says Anwar Shirpurwala, Executive Director, MAIT. “We have seen in the automotive industry how hundreds of local suppliers mushroom whenever a car manufacturer sets up shop. In the first phase of manufacturing we may see manufacturers importing components, but once the volumes are consistent, local entrepreneurs would start sensing the opportunities.”
The biggest challenge is the affordability of PCs especially for those belonging to SECC (Social Economic Caste Census) C and below households. “If you consider the cost of an entry-level PC to be about ` 22,000 a month, and consider the average income of a household to be around ` 12,000, you will see that it will be difficult for such a household to cough up two months’ earnings to buy a PC,” explains P Krishna Kumar, Executive Director, CSMB, Dell India.
According to the Census of India 2011, among 78 million urban households only 15 million own PCs,