The government's decision to scrap import duty on open cell panels is likely to make television sets cheaper by 3-4 per cent. The Finance Ministry said in a notification on Tuesday that the 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" will be nil as against 5 per cent import duty since June 2017. The move is aimed at boosting local manufacturing by lowering input costs for TV makers who have been complaining about a slump in demand.
In addition, the government has also waived custom duty on import of Chip on Film, Printed Circuit Board Assembly (PCBA) and Cell (glass board/ substrate), which are used to manufacture open cell TV panels. These panel account for over 60-70 per cent of the cost of manufacturing LED TV sets and most TV makers import them.
The decision to remove the 5 per cent customs duty will help reduce manufacturing cost by around 3 per cent, and TV makers are expected to pass on the benefit to consumers. Leading players such as Sony, Panasonic and LG will be revising their prices down while many of the new players such as Sansui and Detel plan to follow suit, The Times of India reported.
Indian TV market, estimated to be around Rs 22,000 crore, has welcomed the announcement. Panasonic India and South Asia President and CEO Manish Sharma said that the move will ease the cost pressure on TV and the benefit, once passed to the consumers, will help the industry accelerate demand. "The announcement comes at an opportune time considering the flat growth that TV's have witnessed in the last year. Since open cells form a major share of the total manufacturing cost of TV's, the move will allow us to pass the benefits to the end consumer which would be about 3-4 per cent reduction in price, thus providing the necessary thrust to the market," he told PTI.
In a similar vein, Sunil Nayyar, the managing director of Sony India said the move will improve the sentiments of the buyers and companies alike. "The festival will be even sweeter if the government gets the GST rates on the larger screen size [above 32 inches] to 18 per cent against the 28 per cent now," he told the daily.
Interestingly, customs duty was said to be a factor behind Samsung Electronics' decision last year to shut its TV production unit in India and move to Vietnam. So, with this development, the government's flagship Make in India initiative is expected to get a boost. "Due to certain free-trade agreements, panels from some countries were coming at no duty while from China, there was an import duty. Now there will be parity in the market," Abhishek Garg, director at Jaina group which is introducing Japanese Sansui and Nakmichi TV brands, told the daily.
Given that the government's announcement comes ahead of the festive season, the sales of LED TVs are expected to see an uptick. But given that the inventories for this period are aready in place, the downward revision in prices may not happen immediately. "Our festival pricing is already in place which is attractive compared to the previous month's. Hence post-season, this duty reduction will help us maintain the pricing at same levels with reduced cost pressures on the industry," Sharma explained.
But the newer players may try to make their festive pricing even more attractive on the back of the nil duty in an attempt to create more volumes. So if you are shopping for a TV set in the days ahead, keep an eagle eye out for promotions.
With PTI inputs
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