After heavy lobbying by television (TV) manufacturers, the government has removed import duty on open cell panels and their key components. The move may allow TV manufacturers to cut prices by up to 3.5 percent ahead of festive season.
The Ministry of Finance, in a gazette notification, said customs duty on “open cell (15.6 inch and above) for use in the manufacture of liquid crystal display (LCD) and light emitting diode (LED) TV panels” has been reduced to nil.
Duty on key components used in the making of open cell panels such as chip on film and printed circuit board assembly has also been removed. In June 2017, the government had imposed a 5 percent customs duty on these items.
Together, these items constitute 60-70 percent of the cost of an LED TV.
The move comes as a breather for the country’s TV manufacturers that were struggling to improve sales following three rounds of price hikes since 2017- end. Since the duty was put in place, several TV manufacturers like LG, Sony, Panasonic, Thomson, Kodak, etc. had to increase prices.
According to Kamal Nandi, president, Consumer Electronics and Appliances Manufacturers Association (CEAMA), and business head & executive vice-president, Godrej Appliances, the amendment will provide the necessary boost to the government’s Make in India initiative and attract potential investors.
“CEAMA will work closely with government to formulate and facilitate phased manufacturing and end-to-end manufacturing of TVs in the country,” he said.
The industry association, that has all major consumer durable manufacturers as its member, said a long-term plan has been submitted to the government that outlines a phased manufacturing road map.
According to CEAMA, of the 16 million units produced in the country, nearly 15 million or Rs 40,000 crore worth of LED TVs are sold every year in India. It estimates, the removal of duty will allow companies to cut prices by up to 3.5 percent.
Avneet Singh Marwah, chief executive officer of Super Plastronics, the exclusive brand licensee of Thomson and Kodak TVs in India, said: “We welcome this move.”
“From the last one year we have been requesting the government to decrease the duty on open cell panels. The rate cut on this will boost Indian manufacturing and definitely improve market sentiments this festive season, which will further reflect on sales.”
Pankaj Mohindroo, chairman of India Cellular & Electronics Association (ICEA), said the imposition of duty two years ago had not only forced the country’s largest TV manufacturer to stop manufacturing locally, it also helped the grey market to flourish.
“Rampant smuggling and mis-declaration of open cell as tempered glass to under-value imports was coming in the way of organised manufacturing,” he said. According to ICEA, a lack of clear policy framework has led to loss of significant manufacturing capacities in recent past leading to loss of jobs and lower value creation.
While the duty hike was aimed at promoting local manufacturing of these components, companies argued that open cell panels have to be imported anyway, as no facility to manufacture these items has come up in India.
Samsung Electronics India, then the country’s largest TV manufacturer, wound up its TV manufacturing plant in Chennai by late-2017. Since import of finished TV sets from countries like Vietnam, with whom India has a free trade agreement, does not attract any duty, Samsung has since got TV sets from there. Business Standard