LG Electronics, the country’s second-largest consumer electronics firm, has voiced concerns on the lack of enough incentives to expand local television manufacturing.
Umesh Dhal, chief relationship officer, LG Electronics India, said local manufacturing can be made attractive by “abolishing customs duty on panels and open cells till manufacturing ecosystem for same is ready in India”. He also said the government should incentivize manufacturers for local production.
The statement comes at a time when the country’s largest consumer durable firm Samsung India is negotiating hard with the government. The firm has moved its TV production to Vietnam and is seeking additional sops to restart manufacturing here.
The tussle between the government and manufacturers began last year, when a Customs duty on open cells was revised to 5 percent. A 7.5 percent duty on panels was also levied.
Dhal also said the goods and services tax (GST) rate on TV sets should be brought down, “as it is more of an educative device”.
The demand for a reduction in GST rate on TV sets is not new. Since the introduction of GST, TV makers have been asking the rate to be cut to 18 percent from 28 percent for all types of sets. Though a partial relief was offered by lowering the rate to 18 percent for TVs measuring 32 inch or smaller, larger TV sets still attract 28 percent GST rate. Consequently, manufacturers have raised prices by 5-7 percent.
LG, however, is not halting its production. “We believe in make in India programme and will continue production in India. Every year, we invest to strengthen our manufacturing facilities and will continue doing the same. In fact, we are manufacturing our entire line up of TVs including the premium range in India,” Dhal said. The firm manufactures TVs in Noida and Pune.
While Dhal did not say whether LG was seeking tax holiday to continue manufacturing TVs in India, sources said most leading players have been seeking the same. Samsung’s step of moving its manufacturing from Chennai to Vietnam is not without a rationale.
Vietnam offers a bucket of benefits to manufacturers including cheaper land for setting up facilities, lower import duty on machinery, a cut on the corporate tax rate for about five years. The corporate tax rate at 20 percent is also lower than India’s (30 percent).
While India has been trying to bring investments in this field through its electronics policy, private players cutting down on imports continue to be a pain point. Data from the ministry of electronics and information technology show that till September 2018, only 13.45 percent of the proposed Rs 61,925-crore investment materialized under modified special incentive package scheme in the electronics system design and manufacturing space.
Between 2007 and 2016, value of manufacturing in the electronics sector nearly doubled in India – from Rs 32,900 crore to Rs 56,700 crore. While for Vietnam the amount rose to Rs 5,40,000 crore in 2016 from Rs 23,100 crore.―Business Standard