MAIT, the apex body representing India?s IT hardware, training and R&D services sectors, announced the findings of its Industry Performance Review for fiscal 2008-09. The total PC sales between April 2008 and March 2009, with desktop computers, notebooks and netbooks taken together, were 6.79 million (67.9 lakh) units, registering a decline of seven per cent over the previous year. IT consumption in 2008-09 was severely impacted, especially in the second-half of the fiscal year, by the slowdown in the Indian economy. Impact on consumption of notebooks was most pronounced as growth plummeted to a negative seven percent compared to a high of one-hundred-and-fourteen percent in the previous year. Sales of desktops declined four percent. The October-November-December quarter was the most adversely impacted, subsequent to which growth in PC consumption started to show signs of revival. With business sentiment gradually gaining momentum, PC consumption in fiscal 2009-10 is expected to cross 7.3 million units, registering a 7 percent growth.

Commenting on the findings of the study, MAIT Executive Director, Vinnie Mehta said: ?Consumer sentiment was subdued due to uncertainty in the economy in 2008-09 which impacted the consumption of IT in the country. While consumption in the first-half of the fiscal was satisfactory, less than expected offtake in sales in the second-half pulled down the overall growth into the negative quadrant. A silver lining in the second-half of 2008-09 was the emergence of a new product category, the net book that took the fancy of the consumers. This new form-factor appeared to be better insulated from the prevailing market sentiments.?

He further added, ?Although the sales growth in both the enterprises and the households headed southwards, the overall consumption in the PC market was led by telecom, banking and financial service sectors, education and the e-governance initiatives of the Union and the state governments. Verticals such as BPO/IT-enabled services, manufacturing, retail and households, which traditionally account for significant proportion of the IT market, were very conservative in their IT spends in 2008-09. Sales of desktop clocked 5.27 million (52.7 lakh units) declining 4 percent, and that of Notebooks, with netbooks taken together, another 1.51 million (15.1 lakh) units with a degrowth of 17 percent. Consumption of netbooks exceeded 70 thousand units in fiscal 2008-09. The year also witnessed deviations from the traditional downward trend in pricing for IT products as the dollar continued to be significantly strong compared to the rupee. This was mitigated, to an extent, by price drops due to technology reasons and also due to intense competition. Going forward, with signs of revival in the domestic economy, we expect positive growth for PCs and other IT products for the fiscal 2009-10.?

Western India followed by the South, led PC consumption accounting for thirty-seven per cent and twenty-three per cent of the market respectively. Sales in the West grew by twelve per cent over 2007-08, while in South it declined twenty-two percent. PC consumption in the East increased by eighteen per cent accounting for twenty-two per cent of the market, a reflection of IT activities gaining ground in the region. The Northern states witnessed a decline of thirty-four per cent in PC sales, they accounted for eighteen per cent of the market.

Unlike the trends in the previous years, where sales in the second half of the year have been significantly higher than those in the first-half, 2008-09 witnessed a rather subdued second-half as delineated below.

The bi-annual MAIT Industry Performance Review ? ITOPs, conducted by India?s leading market research firm IMRB International is a survey of the domestic IT market, its potential and trends. This round of the study involved face-to-face interviews with over twenty-five thousand respondents selected randomly across twenty-two cities in India. The MAIT-IMRB study was initiated in 1996-97 and encompasses five broad product segments ? computers, networking products, printers, other peripherals and Internet connections. Apart from the half-yearly review, a supply-side estimation module has also been introduced to monitor industry performance every quarter, alternating with the half-yearly review.

Delineating his thoughts on the current policy environment and the need for spurring IT consumption in the country, especially in these challenging times, MAIT President, S S Raman said: ?We are glad that the outcome of the Union Budget 2009-10 has been satisfactory. Stability in the rate of excise duty at 8 percent for all IT products and components augurs well for the IT industry. Further, the government has, to an extent, resolved the impasse regarding the classification of packaged software, which shall henceforth attract service tax on the licence portion. Issues that remain unresolved are the continuance of the 4% Special Addition Duty (SAD) which is a significant cost for the local manufacturers as also the low rate of abatement for MRP based excise duty assessment for IT products such as notebooks, printers, modems, etc. We have requested the authorities to resolve these at the earliest.?

He further added, ?It should be made mandatory for nationalised and PSU banks to earmark funds for easy and subsidised loans for purchase of IT products and solutions for the SMEs and the home consumers, especially for education. Similarly, Governments ? Central and State should extend interest free loans to all their employees for purchase of IT products. Further, as several e-governance projects are being rolled out, these need to be replicated across all the states in the country and completed at an accelerated pace. Providing for local-language interface will be critical for the success of such projects, especially those aimed at Government-citizen interface.?

Stressing the need for redoubling efforts by the Government and the industry to accelerate growth of the domestic IT market in the country, MAIT Vice President, Ravi Swaminathan said: ?MAIT has set for itself an ambitious target, ?Goal 511?, 500 million internet user, 100 million broadband connection and 100 million connected devices by 2012. This calls for strengthening of the national IT infrastructure along with the physical infrastructure on a priority basis. In this regard we need early roll-out of 3G and Wi-Max networks. These will not only enable consumption of front-end devices, CPEs and other back-end devices, but will also create a new economic paradigm through various applications, services and other avenues created through the network-multiplier effect. Urgent and significant efforts are also needed to build efficiency and reduce wastage in all industry verticals through deployment of green and energy efficient IT products.?