LCD TVs Will Become Costly As 5% Duty On Imported Open Cells Is Back
Consumer Electronics and Appliances Manufacturers Association (CEAMA) said on September 20 that India will reimpose a 5% customs duty on open-cell panels used in televisions from October 1, 2020.
The open-cell panels majorly used in LCD TVs constitute around 65% of the total production cost of TV sets.
Let’s find out how this will impact the television industry of India…
Government Pushing For ‘Atmanirbhar Bharat’!
With the government seeking local manufacturing and value additions under the ‘Atmanirbhar Bharat’ initiative, the customs duty relief offered for a period of one year on open-cell panels expiring at the end of September, 30 will not be extended.
The price increase will not be more than Rs 250 per TV set, said the government officials clarifying rumors about price hikes.
A finance ministry official said, “For how long such import duty sops can continue? The TV industry is well aware of the basic tenets of phased manufacturing. The sop was offered for a limited period of one year in anticipation that the industry would build capacity for manufacturing critical components in India.”
Dismissing price hikes, the official added, “Leading brands are importing Open Cell for a basic price of Rs. 2700 for a 32 inch and about Rs. 4000 to Rs. 4500 for a 42-inch television. The impact of 5% duty on Open Cell would, thus, not be more than Rs 150-250 for a television.”
Another official pointed out that televisions worth Rs 7000 crore were being imported until 2019. With imports of fully made TVs restrained, the government thinks that the imports of the television parts will rise, from Rs 7500 crore in a year,
The official added, “Open-cell capacity building in India would also help making panels for mobile phones which is a huge market.”
TV Manufacturers Argue TV Prices Will Increase!
However, television manufacturers claim that the prices of the fully built panels have risen by 50%. This coupled with an import duty of 5% of a major component in TV set would lead to an increase in sale prices of televisions.
For a 32-inch TV, it would increase by a minimum Rs. 600 and Rs. 1200-1500 for a 42-inch TV. It can go higher for large-screen TV sets.
The industry body CEAMA said that this increase in duty might stress the TV industry that is already struggling due to the COVID-19 pandemic and consumer demand.
Avneet Singh Marwah CEO SPPL, an exclusive brand licensee of THOMSON televisions in India said, “The government needs to understand demand and supply, with this move, India becomes one of the top manufacturing countries to pay the highest duty and taxes on televisions in the world.” “Firstly panel prices have been increased by 120% in China, now finance ministry will increase customs duty. This has come when industry was looking some support from government,” he added.
Kamal Nandi, president, CEAMA, and business head & EVP, Godrej Appliances said the industry is closely working with the government to formulate and facilitate both phased manufacturing and end-to-end manufacturing of televisions in the country.
Now, with India’s key festive season approaching, a prime sales time for electronic and appliances manufacturers, will the price hike decrease consumer demand further?