The personal computer (PC) industry is set to hike prices in the range of 2-4% to offset the impact of an increase in excise duty as proposed in the Union Budget.

The PC manufacturers who operate in an environment of very thin profit margins are unlikely to absorb the hike in excise duty and will pass it on to the customers. The Budget has proposed a 2% increase in excise duty, besides other small hikes in customs tariff rates.

?Prices will increase,? Manufacturers’ Association for Information Technology (MAIT) president Alok Bharadwaj told FE, adding that the rise will take place over the next one to two months depending on the inventories of the various players.

Acer India chief marketing officer S Rajendran confirmed that the PC major would be looking at a price increase of all its products in the next 10 days and it could be little more than 2%.

The R70,000-crore Indian hardware industry, which includes desktops, notebooks, printers and other peripherals, has had a very disappointing 2011-12 fiscal with growth remaining almost flattish.

Another official from an MNC PC manufacturer who did not wish to be identified said that it would be difficult for them to absorb the excise duty hike and will be looking at cues from other players on deciding over increase in prices.

The Indian PC industry is dominated by MNC giants like HP, Dell, Acer and Lenovo, with just one or two domestic players.

The industry, which is highly dependent on import of components, was hoping that the Budget would rationalise duty structure so as to minimise the various procedural hassles while conducting their business. For example, the industry is faced with an inverted duty structure in which the duties on imported components are higher while those on finished products are lower.

The severe fluctuations in the foreign exchange has not helped either. The hardware industry was hoping the Budget would provide them a special status that would result in the much-needed impetus.

?I feel information technology is a big enabler in India and the government should have considered us a priority sector,? said Bharadwaj.

However, the industry players felt that the government’s efforts to set up a technology network for the eventual implementation of the goods and services (GST), increasing enrollment of Aadhaar members, or the use of technology in doling out subsidies would encourage the hardware industry.