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Pay more for same in India!

T R Vivek in New Delhi | October 15, 2004

In spite of regular price cuts, the Indian consumer still coughs up more for a wide range of products than his counterparts in markets like Hong Kong, London or New York.

Globally, prices across countries are best compared by the Big Mac Index the price of McDonald's Big Mac adjusted for exchange rates and purchasing power parity. But there is no index for India as Big Mac is not sold here.

In its absence, Business Standard compiled prices of a handful of products in four markets: New Delhi, Hong Kong, London and New York. In no case were Indian prices the lowest.

Prices squeeze buyers in Indiamart



Hong Kong



Nokia N-gage





Dell Inspiron





Chevrolet Optra





Sony AR21 TV





Johnnie Walker**





*Ex-showroom, Delhi **Black Label (750ml)
All prices converted to Indian rupees. Source: Companies

In certain product categories, the price differences can be explained by the steep import duties in India (150 per cent on liquor and 20 per cent on watches, for instance). But even products with low duties carry a higher price tag in India.

Cellular handsets, for example. Though there is an import duty of only 5 per cent, Nokia mobile phones are cheaper in the US by 15 per cent compared to India. The company's popular gaming mobile Ngage retails in India at Rs 11,500 and at $199 (Rs 9,100) in New York.

"In the US, prices are lower as it is an operator driven market where service providers incentivise handset purchase," said Gautam Advani, head (multimedia products), Nokia India.

This, in spite of the fact that India is one of the top five markets for mobile handsets in the world. Also, manufacturers worldwide have realised that the country is a hugely price-driven market and hence products require special pricing in India. This has led many of them to launch special, stripped-down products in the country.

The price disparity is most obvious in the case of notebook PCs and laptops, though these attract a customs duty of only 10 per cent.

Dell's entry-level laptop Inspiron 1150 is priced at Rs 46,900 in India, whereas in the US the same model costs $799 (Rs 36,700) --- a full Rs 10,200 less.

As no customs duty is levied on laptops if brought in with baggage, most buyers choose to buy laptops in the US or in Hong Kong than in India.

One reason for the price disparity could be that laptops are still not made in India and the volumes sold are still not large enough. However, laptop sales are doubling every year and are expected to touch 200,000 by the end of this year.

"As laptops become a consumer product from being a corporate product, there will be greater price parity," says an industry expert.

Or take the Chevrolet Optra. The bestseller from the General Motors stables, which sells as Suzuki Forenza in US and Nubira and Lacetti in Europe, is more expensive in India than in several other markets, including the UK.

"Cars here could be much cheaper if the total duty of around 52 per cent comes down," said P Balendran, vice-president (corporate affairs), General Motors India, adding, "The cost of components in India is nearly 15 per cent more expensive than Mexico and Korea. So markets closer to such countries benefit in the form of lower pricing."

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