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Michael Dell slams India's PC taxes

Sez tariffs prevent expansion

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Dell Computers wants to expand its PC market in India, but insists that the country's high tariffs on PCs must go.

Chairman and CEO Michael Dell met Indian Prime Minister Manmohan Singh and other top officials while at the Confederation of Indian Industry's CEO forum in hopes to push the government to see it his way.

Dell claims the additional cost prevents the company from expanding and further investing in India. Many countries have no or relatively low taxes on computers, but India's tariffs and sales takes make up 20 to 25 per cent of the cost of a computer, said Dell.

Dell's Indian market share is at five per cent, trailing behind HP, Lenovo and local giant Hindustan Computers, which have had a presence in India longer and offer lower prices.

Dell's inability to compete with their price tags results at least partly from the company shipping fully-assembled systems into India. Paying more in duties than its rivals' locally manufactured boxes makes Dell boxes a harder sell.

Dell hopes to overcome this obstacle when it opens a new plant in a special economic zone near Chennai in southern India. However, while taxes aren't levied on exports in the zone, domestic market products face the normal excises. This will still place Dell at a disadvantage from competitors in the, which placed plants in more local tax-friendly locations.

Dell is investing $30m in the facility, which should turn out 400,000 systems per year, kicking off in July. ®

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