By Priyanka Chowdhury
The recent announcement by the government of its decision to reduce the excise duty by 4 percent is expected to bring down prices of several IT products by 2.5-4 percent. However, so far, apart from D-Link and Microsoft, none of the other vendors has officially reduced prices.
D-Link has announced, with immediate effect, a drop of 2.5-4 percent in the prices of its products manufactured locally in India. These include broadband products, routers, VoIP and SCS components. Microsoft too has notified its partners that it will pass on the excise-cut benefits to its customers, but so far, according to resellers, there has been no such reduction forthcoming from the distributors’ end.
Said Jayesh Kotak, Vice President of Product Management at D-Link India, “Being a major player in the networking industry, D-Link has taken the initiative to respond to the directive issued by the Government of India. We believe that the excise duty cut will definitely work as an economic stimulus, and we have decided to drop the prices of our locally manufactured products. We will pass on the benefits to our partners, and we hope that they will pass it on to the end-customers.”
According to Harinder Salwan, Secretary, ISODA, “The CVD for all packaged software imports, which was at 12.36 percent, has now come down to 8.24 percent. While Microsoft has told us that the price cuts will come into effect immediately, we are yet to receive any communication to this effect from their distributors.”
Added Champak Raj Gurjar, Managing Director, Maxtone Electronics, “On the systems front, price cuts will be only on PCs and peripherals. Components will not fall under this category as they have been already exempted, with zero percent duty on them.”
Many distributors, CRN spoke to, said that their respective vendors are thinking of reducing prices. However, they are currently analyzing the inventory position in the channel and the cost of price protection if they were to reduce prices now. “At present there is an inventory of anywhere between 30 to 45 days. Until this inventory is cleared, I don’t think vendors will pass on the price benefits, hence the price cuts may happen only by the middle of January 2009,” said Suresh Pansari, Managing Director of Rashi Peripherals.
Meanwhile, some believe that vendors should reduce prices immediately because this would help generate some demand during Christmas. “At present, retail buying is at its lowest. With Christmas a few days away, a bit of price cut may bring more business for resellers,” said Vibhor Agarwal, Director, Marketing, Supertron Electronics. |