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Dell Hopes To Save Tax With New Indian Plant

by Leroy Baker, Tax-News.com, New York

18 September 2006

Personal computer maker, Dell is to establish a manufacturing plant in India in an effort to cut import taxes and sell more units in the country.

Last Thursday, Dell signed a memorandum of understanding with the government of Tamil Nadu to locate a manufacturing plant in the southern Indian state.

The new facility will be located in a 50-acre area in Sriperumbudur Hi-Tech Park, outside Chennai, and is expected to open in the first half of 2007. The firm expects to invest about US$60 million in the new plant.

Although Dell is the largest maker of desktop PCs, its market share in India is only 7%, largely because it has to import finished goods to the country which attract higher rates of tax, thus forcing up its retail prices. Therefore, the company expects that the new factory in India will lower its tax bill and help boost sales.

Desktop PCs account for about 70% of Dell's sales in India.

The Indian manufacturing plant will be Dell's third in Asia, after Penang, Malaysia, and Xiamen, China.

A comprehensive report in our Intelligence Report series looking at Tax-Effective Global Manufacturing and Financing Structures is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report8.asp

 

 






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