New Delhi: With computer manufacturers set to cut product prices by 2 per cent to 4 per cent following the recent 4 per cent reduction in Cenvat duty desktop computers and laptops will become marginally cheaper.

Government sources said the price cut has more to do with boosting negative consumer sentiment rather than the direct benefit of the duty cut.

India's largest domestic PC manufacturer, HCL Infosystems says there will be a 2-4 per cent cut on the costs of computers. The company said the price cut will be for products that come pre-loaded with Microsoft.

 Mumbai-based Zenith says it would cut prices by about one per cent while peripherals maker LG has said would reduce the prices of monitors by an average one per cent.

At present, PCs with standard configuration are priced in the range Rs 20,000-40,000, whereas laptops are priced between Rs 25,000-40,000.

The hardware association, Manufacturers Association for Information Technology, said the 4 per cent point across-the-board reduction in Cenvat rate will help bring down the prices of IT products. ''With this, desktops and notebooks will attract 8 per cent excise duty while all other hardware equipment would attract 10 per cent,'' the association said.

Research and advisory firm Gartner unimpressed by the government's move has predicted that sales of personal computers (desktops and laptops) for the fourth quarter will fall by 8-10 per cent on the back of negative consumer sentiment. It says the biggest challenge at present is the sentiment. Besides, resellers and vendors have a huge inventory build-up. They will focus on moving this out than new products said the research firm.

Hardware body MAIT said it is essential that the government rationalises the duty on software which currently attracts 12 per cent service tax, failing which there would be Cenvat overflow in the case of local computer manufacturing. It further said there are several issues that need to be considered. A major concern is the recent rupee-dollar movement which has has led many computer firms to raise prices. Besides the inventory build-up due to low sales is also a concern said an official at MAIT.

Currently, personal computers attract 12 per cent Cenvat, whereas the rate on input components varies from 0-14 per cent.