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One of the world’s top computer makers, Dell says its first India made computers will roll out of its new factory in Chennai from July. However it says computer sales and new investments in the hardware sector are unviable due to high tax rates on computers in India.

Dell will also manufacture laptops and servers in the new facility, a company official said.

According to company CEO Michael Dell, India sales totaled USD 500 million last year, an increase of 70 per cent from the previous years. Dell is rather optimistic of future sales in the country and claims it will hit the USD 1 billion mark.
Most countries around the world have very low taxes, or no taxes at all, on computers, but India levies both import tariffs and sales taxes that make up 20 percent to 25 percent of the cost of a computer, he told reporters during a visit to New Delhi.

Dell computers are more expensive, partly because the company ships fully assembled systems into the country, paying more in duties than its rivals who manufacture locally.

The company is building a computer assembly plant in southern India _ a move that would help boost local sales, but may not be enough to match rivals.

Michael Dell, who met with Indian Prime Minister Manmohan Singh and other top officials, said he was waiting to see how the Indian government moves to lower taxes on computers.

“That will determine the nature and scale of our investment,” he said.

The plant in southern India, which is being set up with an investment of $30 million, will assemble 400,000 units annually, Dell said. The first computer from that plant in Sriperumbudur town is expected to roll out in July, he said.

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