NEW DELHI: Michael Dell believes India is losing out to Vietnam, Taiwan and China on foreign direct investment in information technology because of high tariffs.
The 42-year-old chairman and chief executive officer of Dell Inc, the world’s second-largest PC maker, says investments will grow only when the tariff structure across the IT value chain is rationalised.
PC sales in India was 6 million last year, compared with more than four times that - or 25 million - in China, because import duties and sales tax make up between 20% and 25% of the cost of personal computers here, he said.
“We (including the suppliers) will be spending $19 billion in China and Taiwan, while the equivalent figure for India is approximately zero.”
A Taiwanese components-supplier that’s unhappy with India’s high tariffs yesterday told Dell it plans to invest $5 billion in Vietnam over the next 10 years, Dell said.
“That’s $5 billion in capital that could have come to India,” he said. “This is a major, major issue.”
The Round Rock, Texas-based Dell said its manufacturing plant at Sriperumbudur on the outskirts of Chennai will become operational by July this year.
The facility, with a capacity of 4 lakh units annually, would cater to the domestic market initially and later cater to exports as well.
Dell said his company’s 86 suppliers have signed a petition seeking to lower India’s import duties to zero.
The company, which is facing tough competition from unbranded assemblers, and branded players such as Hewlett Packard, IBM and HCL, is looking to push up growth in India, where it entered late.
How is its direct sales model doing? Dell refuses to reveal anything on this score. But then comes a hint - that the company is opening display centres in its largest market - the US - as part of its greater focus on home market.
“We already have a store in Texas and another on outside New York city,” Dell said adding that in China already the company is trying to reach out to people with various contact programmes, hinting probably that similar display centres could come up in India too.
“We are looking at reaching out to customers in a big way,” he said.
