While scrapping of the Special Additional Duty (SAD) on imported personal computer (PC) components is expected to provide a level playing field by encouraging domestic manufacturing, industry watchers opine that the introduction of an education cess might increase prices of PCs, smart phones and tablets marginally in the near future, as India does not have a big manufacturing ecosystem. Analysts that Business Line spoke to welcomed the move, as despite a tax increase of 0.3 per cent, the government has scrapped the duty structure, wherein manufacturers paid 4 per cent in the past.
Under such an inverted duty structure, the domestic industry is impacted adversely as manufacturers have to pay more for raw material in the form of duty, while the finished product lands with a lower duty and costs less. Industry watchers opined that the proposal to scrap the 4 per cent duty on imported PC components will increase domestic production and reduce dependence on imports of finished products.
With more than 100,000 electronics units in India, the sector will see a spurt in growth with the announcement of incentives for investments of over ₹25 crore, said Somshubro Pal Choudhury, MD, Analog Devices.
Rajendran S, Chief Marketing Officer at Acer India, is relieved that this will move the needle in manufacturing but feels that a lot more needs to be done in terms of power, water and talent.
The China factor However, others have doubts about the policy. “This will not do much as China has manufacturing scale. India should build on its strengths around software intellectual property,” said Sanchit Vir Gogia, an analyst at Greyhound Research. Ashok Chandak, Chairman of the Indian Electronics and Semiconductor Association feels that there might not be an immediate impact on the retail prices of PCs.