Gaming console firms seek cut in duties

Sony Playstation, a leading gaming console player, could give the grey market dealers a run for its money with cheaper consoles if the government rationalises the 35 per cent import duties on gaming consoles.

The prices could come down to as low as Rs 6,000 from the existing Rs 7,000 for a Sony Playstation 2 and Rs 20,000 for the Playstation 3 that retails at Rs 25,000, if the government rationalises the countervailing duty.

While the basic customs duty stands at 10 per cent, there is a 16 per cent countervailing duty and a 8 per cent levy on account of various cess.

Atindriya Bose, country manager, Sony Computer Entertainment, said, "The basic premise of countervailing duty is to protect the local manufacturer, if any. Globally, there are only three console manufacturers, none of which are based in India. Thus, it does not make sense for countervailing duty that only escalates the prices of consoles, allowing an easy entry for the grey market dealers."

Out of an installed base of three lakh Sony Playstation 2 in India, Sony believes that only 15 per cent has been bought through official shops and rest is from the grey market.

"This is just a glimpse of how the grey market has affected us. We can match the grey market sales and accelerate import growth by almost 4 times, if duties were rationalised by the government," said Bose.

The global market for gaming is expected to grow from the current size of Rs 120,000 crore ($30 billion) to Rs 160,000 crore ($40 billion) by 2010. India's share is still a minuscule Rs 312 crore ($78 million).

A reduction in basic customs duty from 10 to 5 per cent and elimination of additional customs duty could enhance India's current share of 0.25 per cent in the Rs 120,000 crore global gaming industry market to 3 per cent by 2010, according to the Associated Chambers of Commerce & Industry of India (Assocham).