Net impact of CVD on imported components is about 9%.
Excise Duty @ 12% on PC manufacturing since February 28, 2006. Thus, a saving of about 3% for a PC company located in H.P. on hardware components only.
Excise Duty @ 12% on OS also. For a P4-HT machine with XPP, OS cost 19.5% of the total machine cost. So the saving in Excise Duty on OS would be 0.12 x 0.195 = 0.0234 or say 2.34%.
Warranty cost for two year’s additional coverage 10% approx. Hence. there would be an additional saving of 1.2% on this score Assume labour, value addition and profit components to be 20% approximately – equivalent to an Excise Duty benefit of about 2.4%. Thus, the arithmetical addition of total saving on account of Excise Duty alone would be 8.94% (approximately 8% in real terms). The total saving in cost only on account of fiscal incentives (not including other minor concessions and Income Tax benefit) shall be 11.4% Freight and insurance cost from Chennai / Mumbai to Himachal Pradesh would be 1% (one way) Incremental freight cost would be 1.5 – 0.5 or say 1%. Add another 0.15% towards cost of extra inventory that one may need to keep in H.P.