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Hit by weak rupee, cos to raise computers prices by 10%: MAIT
Prices of PCs, laptops and IT products will increase about 10 percent due to the weakening of rupee against US dollar that has impacted the margins of computer makers, IT hardware industry body MAIT said on Wednesday.
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New Delhi: Prices of PCs, laptops and IT products will increase about 10 percent due to the weakening of rupee against US dollar that has impacted the margins of computer makers, IT hardware industry body MAIT said on Wednesday.
As the industry is import driven, companies are paying more in rupee terms for procuring raw material, which is eating into their margins.
"IT hardware industry is heavily import dependent. About 85-90 percent industry is import dependent," Manufacturer's Association for Information Technology (MAIT) Executive Director Anwar Shirpurwala told PTI.
"I think a price increase of 10 percent looks to be very fair." he said, when asked about price increase in the IT products on account of the weak domestic currency.
The rupee has depreciated by more than 10 percent in the last one month and had touched all time over of 61.21 against the dollar on July 8.
In June, leading computer makers, including Lenovo, HP and HCL Infosystems said they are set to hike prices of their products by up to 10 percent in coming weeks.
Drawing attention to the fluctuations in the forex market, which is eating into the profits and growth of the companies, said the industry body has been asking the government to include the exchange rate variation (ERV) clause in the Public Procurement Bill.
"We get into contracts with Directorate General of Supplies and Disposal (DGS&D). The biggest challenge is forex fluctuations and somehow that fluctuation is not getting accommodated into the DGS&D contract," he added.
In the past couple of months there has been a 15-20 percent change in the forex. Contracts in the industry usually last for a year and if the currency fluctuations are this steep, it leads to "a negative growth" for the companies and the industry, he said.
Shirpurwala added: "We approached the government to recognise the ERV clause. It is a part of general financial rules, which states that if any contracts is of 18 months or more, the clause can be incorporated. It accommodates the fluctuation at the time of order delivery or dispensing payments.
"Unfortunately, the DGS&D contracts are for less than 18 months so this clause cannot be incorporated. So we are asking the government to find ways to incorporate this clause."
The rupee today closed at 59.34 against the US dollar, neutralising overnight recovery on the back of RBI's measures to curb the rupee volatility.
PTI
As the industry is import driven, companies are paying more in rupee terms for procuring raw material, which is eating into their margins.
"IT hardware industry is heavily import dependent. About 85-90 percent industry is import dependent," Manufacturer's Association for Information Technology (MAIT) Executive Director Anwar Shirpurwala told PTI.
"I think a price increase of 10 percent looks to be very fair." he said, when asked about price increase in the IT products on account of the weak domestic currency.
The rupee has depreciated by more than 10 percent in the last one month and had touched all time over of 61.21 against the dollar on July 8.
In June, leading computer makers, including Lenovo, HP and HCL Infosystems said they are set to hike prices of their products by up to 10 percent in coming weeks.
Drawing attention to the fluctuations in the forex market, which is eating into the profits and growth of the companies, said the industry body has been asking the government to include the exchange rate variation (ERV) clause in the Public Procurement Bill.
"We get into contracts with Directorate General of Supplies and Disposal (DGS&D). The biggest challenge is forex fluctuations and somehow that fluctuation is not getting accommodated into the DGS&D contract," he added.
In the past couple of months there has been a 15-20 percent change in the forex. Contracts in the industry usually last for a year and if the currency fluctuations are this steep, it leads to "a negative growth" for the companies and the industry, he said.
Shirpurwala added: "We approached the government to recognise the ERV clause. It is a part of general financial rules, which states that if any contracts is of 18 months or more, the clause can be incorporated. It accommodates the fluctuation at the time of order delivery or dispensing payments.
"Unfortunately, the DGS&D contracts are for less than 18 months so this clause cannot be incorporated. So we are asking the government to find ways to incorporate this clause."
The rupee today closed at 59.34 against the US dollar, neutralising overnight recovery on the back of RBI's measures to curb the rupee volatility.
PTI
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