The government has scrapped import duty on open cell TV panel used to make television sets, as it aims to boost local manufacturing by lowering input costs for TV makers who have been complaining about a slump in demand.
The decision to remove 5 per cent customs duty will help reduce manufacturing cost by around 3 per cent but it wasn't immediately clear if all TV makers will pass on the benefit to consumers.
Panasonic said it will pass on the benefit of 3-4 per cent reduction to consumers.
Finance Ministry in a 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" will be nil as against 5 per cent import duty previously.
Open cell panels make up for over 60-70 per cent of the cost of manufacturing LED TV sets. Most TV makers import these panels.
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.
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Demand for TV sets in the country has been on a decline amid a general consumer slowdown, heightened competition and increased GST on large TV sets.
Besides, 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.
Television industry welcomed the move saying the move will reduce the cost of making televisions and boost domestic manufacturing.
The announcement comes ahead of the festive season and would positively impact the sales of LED TVs.
The government had in June 2017, imposed a customs duty of 5 per cent on import of such panel.
The other goods for use in the manufacture of open cell of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panels of heading 8529 would also attract nil duty. These include Chip on Film, Printed Circuit Board Assembly (PCBA) and Cell (glass board/substrate).
"Industry welcomes this decision. This will ease the cost pressure on TV and the benefit once passed to the consumers will help the industry accelerate demand," Panasonic India and South Asia President and CEO Manish Sharma told PTI.
"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 said.
To further the push towards affordability for TV's, he urged the government to also consider revising the GST slabs for TV's above 32 inches from 28 per cent slab to 18 per cent.
LG Electronics India said the government's decision will boost domestic manufacturing.
"This is a very positive development... it will certainly boost Make in India," said LG Electronics India Director- Home Entertainment Younchul Park.
Open-cell panel is an important part of TV manufacturing and covers more than half the cost of the unit.
Sony India said the reduction in the duty would help enhance its efforts to increase domestic manufacturing of its TV range.
"The company has long been committed to the government's Make in India initiative. This withdrawal of duty on an open cell provides a strong boost to local manufacturing and will help us further enhance our efforts in this direction," said Sony India Managing Director Sunil Nayyar.
According to Haier India President Eric Braganza, the industry has been pushing for this for some time. TV market is slow, so anything that could ignite the growth is welcome.
When asked whether it would have any impact on TV price, Manish Sharma said currently inventories for the festive season are already in place, however, for fresh imports, the cost impact will be about 3 per cent.
"Our festival pricing is already in place which is attractive compared to the previous month's. Hence postseason, this duty reduction will help us maintain the pricing at same levels with reduced cost pressures on the industry," Sharma said.
Besides removing 5 per cent customs duty imposed on import of open-cell TV panel, the government has waived customs 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.
All leading TV makers along with the Consumer Electronics and Appliances Manufacturers Association had been asking the government to waive it.
Indian TV market, which is estimated to be around Rs 22,000 crore is facing tough times due to slow demand.
Manufacturers like Samsung had shifted TV production lines to Vietnam using the Free Trade Agreement to import it.