The high-end microprocessors like Pentium II and Celeron were on the restricted list so far and required a special import licence. As per a ministry of commerce notification, these have now been put under OGL with effect from August 10. Intel will be the biggest gainer from the announcement as the chip giant is the market leader in the Indian market with an overwhelming 85 per cent share. Of the 1 million units sold per annum in India, 80 lakh are manufactured domestically while 20 lakh are fully imported systems.

Most PC manufacturers and system integrators sell machines with high-end chips like P-II and Celeron, and of late, P-III. Most of these cost a minimum $100 and above, at present. Thus, if taken into account, a minimum base price of $100 per microprocessor, Intel stands to gain at least$6 to $7 which adds up to a saving of close to $5 million to $6 million.

The DGFT decision can be linked to the controversy that had arisen in May last year when the Government decided to levy 22 per cent duty on the then new-genre P-II chips as they were classified by the customs as populated PCBs, rather than ICs which attracted a duty of 5 per cent.

After Intel's submission, the Government relented in September last and decided to charge a 5 per cent duty on all microprocessors. However, the requirement of a SIL remained.

Hence, for each $100 worth of import, Intel importers had to submit a licence certificate valued at three times the value of the import. The premium on each licence being about 2.5 per cent, the importer was effectively paying 6 per cent to 7 per cent premium on every $100 worth of import. The latest DGFT decision to place all chips on OGL has removed that anomaly. However, it is not clear yet if assemblers and manufactuers would pass on the cut in import cost to customers. Besidesbeing a favourite of all top hardware manufacturers, Intel also has a Genuine Intel Dealershipprogramme for the assemblers in the unorganised sector.