SARS hits grey PC market

The Severe Acute Respiratory Syndrome has taken its toll on the grey market for computer hardware with travel to Southeast Asia almost coming to a halt and grounding the route for smuggled goods.

According to industry sources, grey markets like Delhi's Nehru Place do not have enough supply of critical computer components, including memory chips, micro processors and computer hard discs.

The market for assembled personal computers has been hit hard with the prices of components going up 10-15 per cent as a result of the huge supply gap.

The grey market in India relies on contraband sales. Dealers engage people travelling to Southeast Asian countries like Thailand, Singapore, Hong Kong, Malaysia among others to smuggle goods into the country.

The products are not declared to Customs authorities at exit points in the airports. In some cases, Customs officials are also hand-in-glove with the contraband dealers.

Smuggled products help to reduce the cost of computer components and parts and, therefore, the price of computers in the grey market by around 25 per cent.

A chunk of the assembled PC market in India is contraband.

"The organised players have inventories for a couple of months, while the grey market normally keeps small inventories to take advantage of frequent price movements.

"Besides, the organised players have the ability to tap alternate markets if the supply from Southeast Asia stops. Besides, exports of electronic goods are not hit," said an executive from a Delhi-based hardware manufacturer.

"The restriction on movement of people to the Southeast has affected the supply of components in the grey market, while the organised players are continuing to import materials through the normal channel," said a market source.

India's computer market, which sells about 200,000 PCs a month, is dominated by the grey market with a marketshare of about 60 per cent.

The sources, however, said the organised players had registered an increase in sales in April, against the previous months.

"There is an increase in demand for goods from the organised players with the unorganised players not being able to supply materials and components to the grey market," said Vinnie Mehta, executive director, Manufacturers Association of Information Technology.