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DoE wants to IT-ise Indian society - Views on News from Equitymaster
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  • Sep 13, 1999

    DoE wants to IT-ise Indian society

    News reports reveal that the Department of Electronics (DoE) plans to promote personal computer (PC) culture in the country by targeting the home segment. Last month, the Manufacturers Association of Information Technology (MAIT) also initiated steps to boost information technology (IT) demand in the country.

    India's PC penetration is dismal with only 2 PCs per 1,000 people. Compare this to over 400 PCs per 1,000 Americans and 150 PCs per 1,000 Japanese, and one realises that India has a long way to go before it can call itself an IT superpower.

    In a bid to make PCs more affordable, the DoE has recommended that hardware components be exempted from customs as well as excise duties.

    While the DoE has targeted the home segment, MAIT's efforts are more sweeping. MAIT wants to ensure that the recommendations of the IT task force are implemented. The key recommendations of the task force pertaining to the hardware segment include:

  • 100% depreciation on IT hardware/software products over the next two years.
  • IT to be granted priority sector status by banks for the next five years
  • Zero import duty on all IT products till the year 2002

    The IT task force envisages a scenario where PC penetration will be increased from the present level of 1 PC for every 500 persons to 1 PC per 50 persons.

    The DoE seems to be on the right track by focussing on the home segment (82% of PC sales), vis--vis the business segment (18% of PC sales). The business segment has taken to automation in order to improve operational efficiency. But where the home segment is concerned, PCs have only just caught the fancy of users. According to sales figures released by MAIT, in FY99, PC sales (121,346 units) in the home segment improved by a modest 6.2%.

    Proposed steps by DoE and MAIT to push PC penetration will not only boost the hardware segment but also the software segment, since there is a strong correlation between the two. Relatively new concepts like e-commerce and Internet are beginning to make their presence felt in the country, and will induce consumers to hop onto the PC bandwagon



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