_p Finance Minister P. Chidambaram’s budget has resulted in chaos in the channel. On the surface, the assembler community seems to be the worst hit – what with branded PC manufacturers getting an excise duty exemption while PC maintenance or repairs contracts now coming under the purview of service tax. It seems that in one stroke the finance minister has managed to cripple the assembler segment. But, as I said, this is on the surface.
p____p Step back and look beyond the immediate insecurity and the facts stand out clear. In fiscal 2004 the assembler segment contributed Rs 6,750 crore to the PC industry, which made it the largest contributor. The assembler market still holds the largest market share of over 53 percent of the domestic PC market. Do you think that one budgetary announcement could wipe away the existence of this segment?
p____p I think not.
p____p Yes, a skewed duty structure did help the assembler to gain this formidable market share. But if branded players, most of them foreign companies, could survive and still make profits when the duties were as high as 20 percent, whats to stop the assembler from working through this perceived disadvantage? Has the Indian PC market suddenly lost its huge potential? India continues to maintain a robust PC growth rate. And with lower prices, this potential will only get further pronounced.
p____p Perceptions are difficult to change. The assembler is perceived as a friend. He already has the advantage of having an interactive customer base and good rapport with manufacturers. An advantage that he can leverage now to drive sales more aggressively.
p____p When the finance minister announced the duty exemptions, he had the common mans interest in mind. It will do the assembler community a world of good too, if they could adopt the same objective.