According to industry observers, this is a direct fall out of the additional duty of 8 per cent imposed on all imports barring a few. They say that the additional levy nullifies the positive impact of the duty cuts on components.

"There might not be much of an impact on prices of locally-manufactured PCs owing to the special import duty. The prices of imported PCs will, however, go up. In any case, this is good for domestic manufacturers," said Ajai Chowdhry, president and chief executive, HCL Infosystems, the country's largest PC manufacturer.

With the import duty on fully built-up PCs unchanged, multinational PC companies seem to be disappointed. They have been under considerable pressure for a while owing to the rupee depreciation against thedollar, which was pushing up prices of their PCs.

"At present fully built-up systems attract an import duty of around 40 per cent. If the special import duty of 8per cent is applicable to imported PCs as well, then the prices of multinational PCs will certainly go up," Compaq Computer (India) managing director Abhishek Mukherjee said.

The Manufacturers' Association of Information Technology (MAIT), the apex body of the domestic hardware industry, had asked for duty cuts in components so that the interests of the domestic manufacturers are safeguarded and ensure that there is a level playing field between the domestic ciompanies and the multinationals.

According to multinational PC companies, the government through this budget has given a clear message that it prefers locally-manufactured PCs. They even feel that the wide disparity in import duty will result in the slow proliferation of branded PCs in the country.

With the prices of locally-manufactured PCs expected to remain stable, MAIT's aim ofreducing share of the grey market is unlikely to fructify. According to industry analysts, if prices had come down as a result of low import duty on components, there would have been an increasing pressure on grey market operators.

MAIT has also asked for 100 per cent depreciation of computers in the first year itself, which has not been addressed. According to the association, by giving the depreciation benefit, the usage of IT will increase.