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Issue of January 2004 

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What plagues IT penetration

India's spending on IT is one sixth of China in terms of percentage of GDP. This has impacted the overall penetration of IT in almost all significant sectors of the economy. India has the highest tax rate in Asia Pacific on PCs, at about 35 percent—compared to zero in Malaysia and Hong Kong; three percent in Singapore, 15 percent in Pakistan, and 17 percent in China. This has led to a flourishing grey market.

These figures are from a report on the Indian Hardware Industry prepared by Skoch Consultancy Services, an independent IT industry analyst and strategic consultancy firm.

The report also says that non-fiscal measures like switching over to free software have done nothing for reducing consumer prices as 70 percent of it is already pirated. Similarly, introduction of cheap PCs with low-end configurations have not found favor with the consumer segment, as only 12,000 were sold in 2003. India specific technologies like the Simputer have also been non-starters so far.

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