NEW DELHI: The import duty that propelled Samsung to stop making LED televisions in the country, has finally been scrapped in the face of rising imports from ASEAN countries.
According to a senior official in the ministry of electronics and information technology, the five per cent duty on open cell LED TV panel, has been a blotch on the Make in India initiative so the government has removed it to encourage domestic manufacturing.
Hailing the move, industry players said that the cut in duty on open cells, which make up over 65 per cent of the cost of making a TV domestically, will reduce the cost for manufacturers markedly and, in turn, make the prices of TVs cheaper for consumers.
“While a substantial portion of the demand for TVs is being met through local production, the option of sourcing from free trade agreement (FTA) countries remains a threat. The reduction in open cells duty will help in arresting this and thereby safeguard investments made in India by providing a level playing field for domestic manufacturers,” said Kamal Nandi, President – Consumer Electronics and Appliances Manufacturers Association (CEAMA).
Nandi, who is also the business head & executive vice-president of Godrej Appliances, said, LED TVs comprises one of the largest segments under the entire domain of appliance and consumer electronics accounting to a volume of almost 15 million with an estimated sale value of almost Rs. 40,000 crores.
Market leader Samsung Electronics has exited local television production in India last year in October. Incidentally, imports from ASEAN surged last year after Samsung started bringing finished TV sets in from Vietnam which attracts zero duty. Official data shows TV imports from Vietnam soared to Rs 2,317 crore in FY19 from Rs 62 crore in the previous year. In the April-October period of FY19, the volume from Vietnam skyrocketed to over 6,00,000 units from just 16,000 units during the same period in FY18.
The announcement also comes at an opportune time considering the flat growth that TV's have witnessed in the last year, said Manish Sharma, President and CEO, Panasonic India and South Asia. The television market has been flat so far this year, stagnating at around Rs. 22,000 crores. It declined further between the months of July and August by 2-3 per cent with consumers postponing purchases due to high prices, subdued sentiments and consuming audio-visual streaming content mostly on smartphones.
“The withdrawal of duty on open cells will allow us to pass the benefits to the end consumer which would be about 3-4 per cent reduction in price,” Sharma added.
Online-only brands including Thomson TV also welcomed the move. “The decision is set to improve market sentiments this festive season, which will further reflect on sales," believes Avneet Singh Marvah, CEO of SPPL, the exclusive brand licensee of Thomson TVs. For some brands, however, though their inventories for the festive season are already in place coupled with attractive pricing, this duty reduction will help them maintain the pricing at same levels also post season with reduced cost pressures on the industry.
To further the push towards affordability for TV's, the industry is now pinning hopes on a tax cut in the GST Council meeting scheduled to take place in Goa this Friday. “We would urge the government to also consider revising the GST slabs for large screen TV's above 32 inches from 28 per cent slab to 18 per cent,” Sharma noted.