The duty cuts announced by the government on Thursday are likely to result in a price drop of 5-8 per cent, according to the industry.
Skoch Consultancy, a IT tracking firm, said following the duty cuts it expects a higher than 50 per cent growth in PC sales and there will be 8 per cent price drops in the prices of PCs giving an additional 20 per cent growth due to the price cuts.
Ajai Chowdhury, CEO, HCL Infosystems, said the duty cuts in generally will result in a 5-7 per cent drop in prices in the prices of PCs.
So how much will HCL Infosystems pass on to the customers? He said: "It is difficult to do anything immediately as we have inventories too. We are studying the announcements. We will pass on the benefits as it happens."
Hailing the fiscal sops given to the hardware sector, Manufacturers Association Information Technology said that it would make the domestic IT industry globally competitive.
"The government has met a long standing demand of the IT manufacturing industry. The cut is excise duty to 8 per cent will make the organised sector price-competitive vis-à-vis the grey market, leading to higher PC penetration in the country, Vinnie Mehta, executive director, MAIT said in a statement.
Chowdhury added that it will help manufacturing of PCs in a big way and should curb the grey market, he said.
The government announced excise duty cuts to 8 per cent on computers from 16 per cent and abolished 4 per cent special additional duty and customs duty on IT and electronics products.
The industry has been seeking this for a long time, he said, adding that the government is focusing on hardware sector, which would help in the country becoming a 'superpower' in hardware sector also, he added.
Meanwhile, PCS Industries Ltd director H C Tandon said the slash would reduce the gap between the organised and unorganised sector and would curb the growth of the grey market.
This would also fuel demand as prices spiral down due an automatic market expansion, he said, the timing is excellent as the hardware industry witnesses major sales in the first three months of the year.
"We will definitely see a spurt in demand and growth in the PC segment," he added.
The Manufacturers Association of Information Technology also hailed the move, stating that excise and special additional duty would boost domestic PC consumption.
The apex body of the hardware, training and R&D service sectors of the IT industry in the country, welcomed the decision, saying that this was a 'long-standing demand of the industry.'