The Indian government recently announced its discovery of the fact
that over 80 per cent of cell phone users in India are using instruments that
were purchased from the gray market.
While this might be a surprise to some, it isn't exactly news. Every major
metro has its own version of the 'smugglers arcade'a Palika Bazaar in Delhi
or a Heera Panna in Mumbaiwhere people flock to buy anything from the
latest Nokia handset to the PlayStation 2 for a reasonable price.
And this also holds true for the computer industry in India. The difference
in the price of a product in the US and here is considerable. The main reason
for the differential obviously is the customs duties levied on products that are
imported into India. A handheld computer that costs a relatively affordable
Rs 8,000 in Singapore ends up costing you about Rs 15,000 by the time it arrives
on our shores.
Is it any surprise then that there exists a thriving gray market for digital
devices? After all, the alternative is to settle for something that is older or lacks
features compared to another that we would prefer. This has also resulted in
the Indian consumers having to accept, in some cases, obsolete technology
products that do not find markets in other parts of the world.
The initial purpose of customs duties was to protect the fledgling Indian
industry and create an environment in which it could grow. While there are
still instances in which such a philosophy makes sense, globalisation means
that in some cases it has outlived its purpose.
Eliminating customs duties might not make sense for products like desk-
top PCs because there exists a thriving industry of local assemblers and man-
ufacturers, but there is no reason that the same rule be applied to components
like processors and graphics cards or other products like digital cameras, which
are just not manufactured indigenously. The likelihood of an Indian manu-
facturer deciding to develop a processor that takes on Intel's best is extremely
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