PC makers demand smartphone duty model to make in India

Three out of four personal computers sold in India are imported. PC makers now want the government to impose higher duties on imports and encourage local manufacturing, by replicating the successful model it has adopted in bringing global smartphone companies to make in India.

Nearly half of all smartphones sold in the country are now manufactured locally, however, the same cannot be said for PCs. India’s PC market grew to 11.21 million units in the year that ended March 31, but less than one-fourth of them or 2.68 million units are produced locally.

“We want a duty differential scheme which will create a difference in cost between importing and manufacturing. The moment you do that and manufacturing here becomes cheaper, all the players are going to jump on it,” said Anwar Shirpurwala, Executive Director of hardware lobby group Manufacturers’ Association of Information Technology (MAIT).

India has an ambitious target to boost its electronics manufacturing sector to $400 billion by 2020, but at the current run rate, MAIT expects that number to reach just $104 billion. The lobby group says that if those figures are to be achieved, the country needs to look beyond local manufacturing of smartphones.

Due to the lack of incentives for manufacturing PCs in India, capacities that have already been installed by global PC makers such as Dell, Lenovo and HP are running under 25 per cent utilisation. While the demand from the local market for PCs certainly exists, the costs are too high for these companies to make in India.

“It has nothing to do with demand, it’s got everything to do with the cost. The investments made are going waste as these capacities are not being utilised. If you simply look at budgetary schemes that have a technology push, it’s clear that the requirement for PCs is only going to increase,” added Shirpurwala.

While growth of PC sales in India will not match that of smartphones, MAIT estimates that shipments will grow to 21 million units by 2020, and a push to locally manufacture these devices can have a huge impact on the sector. For every million PCs made in India, around 660 people are employed directly and a further 2,640 people are employed indirectly.

However, like smartphones, India is still an underpenetrated market for PCs and global manufacturers are keen to tap its potential in order to offset the decline in sales globally. According to MAIT, no less than three companies are interested to set up plants to product PCs in the country, apart from the four that are already present here.

Further, PC manufacturing in India would bring a whole host of component manufacturers along and could eventually lead to enough demand to justify manufacturing complex components such as chips locally.