Memory card prices to fall 15% on duty cut

Good news for the users of flash memory cards, USB drives and memory sticks since the government has cut the duty on memory cards from 21% to 4%.

And memory card makers like Kingston, Transcend and San disk are set to reduce prices by 15% from next month, thereby eliminating a thriving grey market (which had 95% share) for such products.

These cards are used for an array of applications like storing data, recording videos, music and even capturing pictures on digital cameras or mobile phones. Flash memory cards are used in mobile phones to add memory, which can range from 512 MB to 8 GB. USB drives/memory sticks can be attached in laptops and desktop computers.

The flash memory card market is estimated to be over 25 million units per year. With an average price of Rs 700 per card, the Indian market for such products is estimated to be over Rs 1,750 crore. Currently, about 95% of the memory cards and drives in India are sold through the grey market.

Palika Bazaar and Nehru Place in Delhi and Heera Panna market in Mumbai are the hubs for illegal importers who smuggle the products. Players selling products legally were taking a direct hit of 30% in terms of duties and taxes whereas the grey market players used to evade all levies.

The legal importers used to pay about 16% CVD (with a one per cent higher education cess over it), which has been waived off. With an additional 2% education cess and a 4% special additional duty, legal importers used to pay about 21.1%. Add to it a 4% VAT and a 5.5% Octroi (in some cities like Mumbai), the price of a legal product would go up to 30% higher.

With the mobile phones getting cheaper day by day,now it is the time for the memory card will cut down its rate.