The reduction in basic customs duty on components used in television sets, announced in Budget 2014-15, would bring down imports by about 10 per cent of completely built units (CBU), according to the Consumer Electronics and Appliance Manufacturers Association (CEAMA).
Currently, 25 per cent of LED and LCD TVs are imported as CBUs from abroad. Of the TVs assembled here, 75-80 per cent of components - including display panels that go into a flat-panel TV - are imported. The move to bring down customs duty on panels below 19-inch as well as picture tubes for conventional TVs will spur their assembling here, CEAMA executives said. Nineteen-inch and above panels already attract zero per cent customs duty in India, so assembling them here is easy.
However, the big move that will spur real manufacturing is the exemption of customs duty on processed glass and allied inputs that go into the manufacture of panels, the executives added. This will encourage domestic manufacturers to produce panels here rather than importing them from abroad.
This development is significant because companies have repeatedly said in the past that the local component base will have to be strong if India is to emerge as a manufacturing base for electronic goods.
Anirudh Dhoot, director, Videocon Industries, who is also the president of CEAMA, says the first few steps have been taken in this regard. “Customs duty exemption will encourage greater value addition in the manufacture of LED and LCD TVs, critical for the local industry. It will also bring down prices, giving a boost to consumption.”
The total TV market stands at 13-14 million units, with 10 million constituting flat-panel TVs, and three-to-four million being conventional TVs. By the end of FY15, the TV market is expected to cross the 15-million-unit-mark, led by flat panel TVs, which are growing in double-digits.
The conventional TV segment, which is shrinking rapidly, is expected to get an extended lease of life with the move to exempt customs duty on picture tubes, a key input that goes into its manufacture.
B D Park, president and CEO of Samsung India, said: “Significant encouragement has been provided to domestic manufacturing that will likely enhance both local production and employment.”
In the past two years, successive governments have been heeding advice from manufacturers in its bid to encourage local production of electronics goods, market experts say.
In February 2013, for instance, the then Finance Minister P Chidambaram brought down value-added tax on set-top boxes (STBs) to two per cent from 14 per cent, while at the same time raised the import duty on STBs by five per cent to 10 per cent. This gave local STB manufacturers a level-playing field, since it was no longer cheaper for users (such as digital cable and DTH operators) to import STBs.
Local STB makers including Videocon were predictably excited with the move. The NDA government, CEAMA officials say, has emphasised its commitment to take up the next wave of digitisation in India with STBs made indigenously rather than procured from abroad.
Companies now hope this effort will be followed both in letter and spirit.