Samsung last year shifted its TV production to Vietnam after the government doubled customs duty on imported LCD and LED TV panels.
Now, the government has sought a commitment from Samsung that the South Korean electronics company will bring production of TVs back to India if duty on ‘open cells’ – which prompted it to relocate manufacturing to Vietnam – was removed, the Economic Times reported.
In Union Budget 2018, the government doubled customs duty on imported LCD and LED TV panels to 15% from 7.5% while the duty on ‘open cells’ used in the manufacture of LCD and LED televisions was hiked to 10%, it was halved after the industry immediately sought a rollback since it wasn’t ready to manufacture the component.
The company has been “non-committal so far,” the ET report quoted a senior government official as saying. He said the government and the company are discussing the matter.
Samsung’s decision to shift TV production to Vietnam was a severe setback for the government’s Make in India initiative. Samsung’s largest production hub is located in Vietnam.
Worth mentioning here is that Vietnam offers a host of benefits including income tax holidays for up to 15 years for manufacturers. Indian electronics manufacturers have been lobbying the government to provide similar exemptions to boost local production, which is suffering due to cheaper imports from Vietnam through the free trade agreement India has with ASEAN.
“We feel Samsung was already planning to shift its production of TV panels to Vietnam and this imposition of duty on open cells was one opportunity they got,” the official told ET. “They used it to shift out to Vietnam from where they can use the free trade agreement route to avoid the duty.”
The government also seems to be upset because it was informed about the move “only after the company stopped manufacturing” TVs in India, the official added.
The government is actively considering the removal of the 5% customs duty on open cells. Open cells are among the most critical parts in a TV panel and account for 65-70% of a set’s production value.―Times Now