Zero Duty: Channel Seeks ClarityWritten by Stanley Mekkattu Glancy
Back in June this year, when 360 Magazine first mooted question about impact zero duty will have on Indian IT industry, most just shrugged it off. For most manufacturers and distributors this was something too far off in future to worry about. But 360 Magazine’s Anniversary issue on topic did set industry thinking. This time round when we spoke to industry leaders, reaction was expectedly different. With WTO’s zero duty regime now looming large over horizon, industry leaders are a worried lot. Confusion is order of day with even most optimistic industry leader sounding befuddled about scenario that will emerge. 360 Magazine decided to put things in perspective by putting spotlight on benefits that will accrue while highlighting areas of confusion.Implications The positive aspect of move is there for all to see. The market will explode. More global brands will now foray into Indian market. And thanks to this increased competition, prices will fall and PC penetration will rise substantially. According to Aditya Bhuwania, director, Priya Group, “The customer segment that initially opted for refurbished PCs can now afford a new one, as price difference would be marginal.” Industry veterans expect zero duty to not only opens up market but also iron out inefficiencies in distribution system. This will bring in more structure into way business is now managed. Says Suresh Pansari, managing director, Rashi Peripherals, “While market size will increase, manufacturers will have to offer more benefits and schemes to attract end-users.” Most manufacturers have been giving best possible prices to India. Some have even been subsidizing. This opens up possibility of developing India as an export hub. But Pansari feels that government needs to take more positive steps like rationalizing tax structure since India can develop itself as an export port to neighboring countries as well as Far East markets. While gray market dominance has been on decline, zero duty is expected to be final nail in coffin. Says Rajshekhar Bhatt, Sales & Marketing Manager, Creative Technology, “Since service plays an important role in India it would discourage customers from gray market products, as zero duty would do away with cost advantage unofficial channel currently enjoys.” Even official channel will have to contend with issues like thin margins, over distribution and heavy competition. Other than this, industry also faces issues like inverted duty structure, as basic raw materials and dual usage items attract higher customs duty than finished goods. Says K. R. Naik, chairman and MD, Dlink, “The obsolescence rate of IT products is high. The issue gets compounded when factors like high cost of capital, energy and other infrastructure deficiencies are taken into account.” Affected Manufacturers While things look rosy for end-user, indigenous manufacturers are not so happy with turn of events. While actual implications can only be gauged post budget 2005, most domestic manufacturers are worried about losing price advantage, which they now hold, as zero duty will provide a level playing field to international brands. Low cost of manufacturing is single biggest advantage India has to offer to world. Also, India is centrally located between manufacturing nations like China and Taiwan and major markets like Europe, Africa and West Asia. India could be developed into a base for hardware outsourcing and supply to these markets. For this, India needs to focus on developing world-class logistics and bringing down transaction time down to international levels. Says Naik, “Infrastructure required for hardware manufacturing need to be improved and manufacturing-friendly policies need to implemented by government to encourage domestic manufacturing.” Another factor that has proved a dampener is India’s local market. Most manufacturers are reluctant to invest in country, as internal volumes don’t justify costs involved. Says J. Kulkarni, CEO, Redington, “The cost of manufacturing is lower in India than in either Malaysia or Taiwan. But domestic volume has to go up before indigenous manufacturing actually takes off. Manufacturing is linked to duty becoming zero, domestic market size and business friendly customs processes.” India’s archaic customs laws and unpredictable government policies has also served to discourage potential investors. But issues related to duty on warranty products will now be sorted out. But Bhuwania says, “The belief that manufacturing in India is cheaper is a myth. While labor costs are lower, India loses out where productivity is concerned.” According to him, in China, estimated cost of packaging and manufacturing a motherboard is Rs 150 whereas in India it is around Rs 300, as China boasts six times higher productivity. Indirect factors like cultural issues too come into play. Indian manufacturers have been attempting to change work culture for a long time now. Most have managed to bring down cost to viable levels. But most industry leaders agree that on manufacturing side, India lost battle a long time ago. Only government can now take steps to alter this status quo. Sujay Chohan, vice president-research director, Gartner India puts things in perspective. Says he, “India was never a manufacturing destination. What we call manufacturing is actually assembling of imported components. Hence, zero duty won’t have an impact on domestic manufacturing. The market only stands to grow. But domestic manufacturers will now have to compete on global standards. Even internationally acclaimed brands will be forced to compete on basis of price as well as quality.”
| | On PhotorealismWritten by Nashville
American photorealist Audrey Flack has once said and I quote, “There is an instinct for realism, a powerful drive to reproduce oneself. The fascination of photorealistic paintings lies partly in their apparent replication of life, but these are not merely replications. These paintings are often out of life scale, varying from over life-size to under life-size, from brilliant, heightened color to pale, undertone hues."Flack’s thoughts sum up what Photorealism is all about. Known as a painting movement of mid-20th century which began in late 1960s, scenes are painted in a style closely resembling photographs in Photorealism. Artists painted from photographs or depicted objects and people as close to real life as possible, including every minute detail. However, true subject of a photorealist’s work is way we unconsciously interpret photographs and paintings in order to create a mental image of object represented. The movement’s center is located in United States. Among most highly-regarded American photorealist painters are Flack, Richard Estes, Chuck Close, Charles Bell, and Ralph Goings. Estes and Close are leading members of Photorealist movement. Estes specializes in street scenes with elaborate reflections in window-glass while Close does enormous portraits of neutral faces. The Photorealism movement was also strong in Europe from late 1960s into 1970s, where his type of illusionism is known principally as Superrealism. The style is tight and precisionistic. Some of renowned Russian photorealists include Andrew Abramov, Soryn Codytsa and Arlette Steenmans.
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