'PCs to become costly by only Rs 60 excise duty hike'

The Manufacturer's Association of IT industry (MAIT) today said levy of concessional 5% excise duty on microprocessors will push prices of PCs only by Rs 60.

"There is expected to be a hike in price of PCs (personal computers) because of the 5% excise duty, but the impact is marginal," MAIT Executive Director Ashwini Aggarwal told PTI.

The price hike could be to the tune of Rs 60 for a Rs 25,000 computer, which is negligible.

The Budget 2011-12 has proposed to levy a 5% excise duty on microprocessors, floppy disk drives, hard drives, CD-ROM drives and flash memory.

Microprocessors, the brain of the PC, is responsible for the computing power of the PC. Depending on the processor type and the overall PC configuration, microprocessors cost can be 15-22% of the total price of a basic PC.

Intel, which is the world's largest chip maker is still evaluating the impact of the increase in excise duty.

Sandeep Aurora, Director-Marketing for Intel South Asia said, "We think the increase at a systems level should not be substantial. The rupee-dollar exchange rate will also determine the landing cost of the processor in India, apart from the levy."

HCL Infosystems said the rise in excise duty will result in some price increase due to MODVAT (modified value-added tax) overflow.

"The increase in excise duty may result in MODVAT (modified value-added tax) overflow and will result in some price increase for the full product," HCL Infosystems Chairman Ajai Chowdhry said.

Another player, AMD said there could be a 1-2% increase in PC prices.

"The impact would be visible soon in the assembled PC market. However, the impact on branded PCs would depend on when the companies start passing on the hike to the consumer," Ravi Swaminathan, managing director and corporate vice-president (sales and marketing), AMD India said.