To begin with, the company will manufacture between 50,000 to 75,000 PCs per annum at its new plant which is expected to become operational by January. Eventually, it has plans to set up a large-scale hardware manufacturing operation in India and launch several new products from its stable.

The Taiwanese giant, the third largest manufacturer of PCs in the world, had been mulling the options of Bangalore, Kerala and Pondicherry as the likely choices, for the last couple of months. In spite of aggressive pitching by the Kerala and Karnataka governments to lure it to set up the plant in their respective states, the company picked Pondicherry because of the 30 per cent corporate tax advantage that it will get in the Union territory, industry sources said.

A tax-free regime will make the company's operations more viable and help it achieve economies of scale much earlier, sources pointed out.Unlike other multinational PC manufacturers, Acer is looking at making its Indian operations profitable at the earliest.

When contacted in Bangalore, Acer India managing director Arun Sinha said a final decision was yet to be taken and the company was still in the process of chalking out its plans. "Pondicherry does give us the tax advantage, but we also need to look at overall cost-effectiveness and see that efficiency does not suffer. A final decision will be taken by December," he added.

The $6.5-billion Acer Group had recently set up its wholly-owned subsidiary in India after calling off its joint venture with Wipro. The new Indian entity, set up in September through the Singapore holding company Acer Computer International, has approval for a small paid-up capital investment of Rs 12.7 crore.

Even though Acer has plans to manufacture and assemble its entire range of PCs and peripherals and provide customer services in India, as it is keen to tap the potential market in the entire sub-continent andnearby countries, Sinha denied any immediate move to approach the Foreign Investment Promotion Board for permission to get additional equity investment.

"The initial plan for the year 2000 is to manufacture only one range of personal computers, but it is likely that notebooks and other products may be introduced later," he said.

Acer and Wipro had announced the dissolution of their JV in April this year and Wipro had bought out the 45 per cent stake of Acer in the venture. Acer had been selling about 30,000 units a year before that