I-T hardware cos bleed; seek govt help

With the rupee's sharp devaluation and stalled government procurement contracts hitting margins hard, the I-T hardware industry is worried that it may see no growth this year. CNBC-TV18’s Shreya Roy reports that manufacturers are now seeking government help to keep the sector from crashing.
 
It's proving to be a soft patch for the Rs 70,000 crore I-T hardware industry; the heavily import-dependent sector has been hit hard by the rupee's fall. With the sector losing around Rs 300 crore a month because of currency fluctuations, adding to the trouble is that government procurement deals, which account for 25% of the domestic hardware market, have been stalled for sometime now.

Directorate general of supplies and disposals contracts for government procurement of I-T hardware products such as laptops, printers, scanners, etc have been stalled for almost four to five months now due to discontinuity in contracts, differences about new rates, and delays in decision making. While rupee devaluation continues to eat into margins, these gaps in purchase are not doing much to help. As a result, according to industry body MAIT, the sector will see no growth this year, and even the bottom-line will be negative. "This year, there has been a four month gap, and we still don't have a contract. The discussions are still going on, and could go on to take six months,” said Alok Bharadwaj, president of MAIT and senior vice president of Canon. Big companies such as Canon, Xerox, HCL Infosystems, Wipro etc are all likely to be impacted. And now, manufacturers are trying to maintain margins by going in for price hikes. Alok bharadwaj points out that prices have changed three times in the last one year - the first time that has happened. Bleeding I-T hardware firms have now turned to the government for help, asking for protection against currency fluctuation. MAIT also approached the ministry of commerce for inclusion of exchange rate variations, among other things, in new contracts. All eyes are now on the government to see if indeed it comes to the aid of the ailing sector soon. Watch the accompanying video for more details..