Financial Daily from THE HINDU group of publications
Wednesday, Mar 20, 2002
Info-Tech - Telecommunications
Mobile prices slashed
NEW DELHI, March 19
MOBILE handset manufacturers Nokia, Motorola, Samsung, Alcatel, Mitsubishi, Siemens, Sony Ericsson, Philips and Panasonic have slashed prices by between 6.6 per cent and 47 per cent.
Passing on the benefits of the abolition of 16 per cent countervailing duty (CVD) to the consumers, market leader Nokia has resorted to a price cut of between 8.8 per cent and 15.3 per cent depending on the model while Motorola has slashed prices by 7.7 per cent to 17.6 per cent.
Samsung mobile handsets are now cheaper by around 6.6 -10.5 per cent; Alcatel has resorted to a 7.6 - 9. 5 per cent cut; Siemens 9.2 -11.9 per cent; Mitsubishi 9.9 - 47 per cent and Philips 12.7-16.5 per cent.
The newly formed collaboration, Sony Ericsson, has resorted a price cut of between 7.1 per cent and 10.5 per cent on its handset models.
Disclosing this at a joint press conference held under the umbrella of the Indian Cellular Association (ICA), the mobile manufacturers noted that they welcomed the Governments progressive step of abolishing CVD on handsets. This will change the current equation between genuine and illegal markets, increasing the share of genuine handset market up from an estimated 10 per cent to 25 per cent.
According to Mr Pankaj Mohindroo, President, ICA, the abolition of CVD in this Budget had narrowed the price differential between the legal and illegal markets and to a certain extent, would enable the industry to fight the grey market.
He noted that in order to provide a further impetus to this industry, the Government should retain the customs duty at 5 per cent and abolish 4 per cent special additional duty.
Moreover, mobile handsets have been categorised as an IT product in the approved list of the Ministry of Information Technology.
The State Governments should levy uniform sales tax of 4 per cent to help reduce the share of the illegal market. Currently, Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Rajasthan and West Bengal are the only States that levy 4 per cent sales tax on mobile handsets, he said.
Mr Mohindroo noted that currently the grey market had over 90 per cent share in the country, totalling over Rs 600 crore. This had restricted the growth of the cellular handset industry and the consumers were not able to get genuine handsets and were also deprived of warranty and after-sales support.
This had been hampering the operations of the legal manufacturers as also causing a huge revenue loss to the Government. It was likely to increase, unless the Government took more steps, he said.
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