India's MAIT (Manufacturers' Association of Information Technology) released data this week showing that PC sales in India are expected to reach four million units in the current fiscal year ending March 5, 2005, marking 32% year-on-year growth fueled by high corporate and rural demand, as well as a sharp drop in prices.

 

In the 2003-2004 fiscal year, which ended on March 31, domestic PC sales totaled approximately 3.04 million units. PC sales rose 37% to a record 1.7 million between April and September 2004, thanks to increased procurement from the telecom, banking, and retail sectors that was spurred by a series of government tax cuts. According to the MAIT report, PC prices fell between 8% and 12% after the government took action in January to cut excise duties by half to 8%, lowered peak customs duty by 5%, and eliminated a 4% Special Additional Tax.

 

MAIT's report indicates that growth was actually less than it could have potentially been due to a truckers' strike in August that caused PC sales to fall marginally in the July-September quarter. The strike erupted following the announcement of the government budget for 2004-2005 in early July, and disrupted business for the better part of three weeks. Computer sales for the quarter ending in September 2004 totaled 824,000 units, down 7% from the 890,000 units posted in the previous quarter.

 

Brand-name PCs are growing in popularity in India as the price differential with assembled PCs begins to narrow, prompting an influx of foreign PC companies such as HP and Dell that are hoping to compete with domestic makers such as HCL Infosystems. The share of lesser known domestic brands and unbranded machines fell to 44% in the first six months of 2004-2005, compared with a 57% market share for the last fiscal year.