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Do not to sign any new FTAs for next 5 years: Anirudh Dhoot

In this interview, Anirudh Dhoot, President, CEAMA and Director, Videocon, suggests a slew of measures to give a boost to the consumer electronics industry, which is currently struggling due to sluggish market

Rakesh Rao Mumbai
Anirudh Dhoot, President, CEAMA, and Director, Videocon

Last Updated : Jul 02 2014 | 10:31 AM IST

With the Finance Minister Arun Jaitley all set to present the first Budget of the Narendra Modi-led NDA government, in this e-interview with Rakesh Rao, Anirudh Dhoot, President, Consumer Electronics and Appliances Manufacturers Association (CEAMA) and Director, Videocon, proposes steps that the new government should take to revive the consumer electronics industry.
 
What are your expectations from the new government?
The consumer durable industry is all set to ride high with the emergence of the new Government, as new policies and initiatives will pave the way for growth and advancement. The newly formed Government has already indicated a clear tax policy and interest rate rationalisation which would help in the growth of manufacturing industries. With the ensuing Budget aiming to stabilise the economy, we expect a turnaround in the consumer sentiments.
 
The relief provided to the industry, via interim budget, through significant reductions in the Excise Duty, from 12% to 10% on products, inputs and parts, has helped the sector. CEAMA would request for this continued support in this fiscal as the industry is still struggling and Index of Industrial Production (IIP) has not shown a healthy growth. CEAMA foresees an improvement in the industry standards, eradication of grey markets and an overall boost to the sector from the new Government.
 
The digitalisation of cable TV has created huge demand for set top boxes in the country and it is likely to reach 75 million units for next one to two years. Thus, it is very important to manufacture Set Top Boxes in the country. However industry would need proper incentives to boost Set Top Box manufacturing in the country. CEAMA recommends that the provision of ‘C’ form waver should be applicable to set top boxes. Currently, Indian manufacturers have to pay 12.5 to 14% VAT as Cable and DTH operators do not provide them ‘C’ Form, since they are leasing out boxes. However, DTH operators do not pay any VAT when they import the boxes. Set top box industry provides huge potential for economic activity, employment generation and saving valuable foreign exchange and increased revenue for the Government.

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What measures should the government take to revive the consumer electronics industry?
The consumer electronics industry is currently struggling due to sluggish market and bleak weather conditions. In order for the industry to bounce back, CEAMA has proposed recommendations keeping in mind the twin objectives of manufacturing growth & also increasing demand of the products.
 
We strongly propose removal of the Inverted Duty structure on consumer electronics and home appliances, arising due to implementation of free trade agreements.  We also recommend to review the existing FTAs which have not been in favour of the industry overall and not to sign any new FTAs for next 5 years. Government should also accelerate implementation of uniform Goods & Service Tax (GST) that will lower transaction costs.
 
CEAMA also recommend that the provision of ‘C’ form waver should be applicable to Set Top Boxes as applicable for telecom. Consumer durables sector is a very important part of national Economy. Its contribution to IIP is more than 5%. It is an employment intensive sector, where one job in manufacturing creates three more in allied sectors. The sector contributes to better standard of living, improved quality of life and provides information & entertainment to masses.
 
Government also needs to provide same incentives to home appliances industry which are available to consumer electronics industry under ESDM policy, as home appliances contribute substantially to current account deficit of the country. Therefore, there is an urgent need to promote manufacturing of these products and their components within the country.
 
Which are the issues that need to be addressed on a priority?
FTAs have gravely affected manufacturing in our sector. It has also resulted in loss of revenue to the government. CEAMA strongly recommend review of existing FTAs and no new FTAs to be signed for next five years. Apart from this, we urge speedy implementation of Goods & Service Tax that will ultimately lower transaction costs.
 
Are there any other issues that Budget should focus on?
Lowering of Excise duty from 12% to 10% on our sector products and most of its inputs have provided much relief to the consumer electronics & home appliances industry, which is struggling due to sluggish market conditions. We hope that the same will be continued by the new government for this fiscal, as the industry is struggling and IIP is not shown healthy growth.
 
There is a general consensus in the country on speedy implementation of GST. Introduction of GST is expected to decrease compliance burden for businesses and will bring down the total incidence of taxes by eliminating cascading of taxes on goods and services. We urge that GST should be implemented soon and the tax system should be made simpler and transparent, so that the honest tax payer is not harassed.
 
Small TV manufacturers who are making CRT TVs are facing very difficult situation due to demand shrinking rapidly. At present smaller size LCD/LED TVs are not viable to manufacture due to 10% duty on the panels below 19”.  Therefore, we recommended that on smaller size panels, customs duty should be brought down to 0% to help TV manufacturers who are SMEs.
 
The production of indigenous Colour Picture Tube (CPT) has stopped and TV manufactures in the country have no option but to import CPTs by paying 10% customs duty, we have  recommended that import duty on CPT be brought down to 0%.

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First Published: Jul 02 2014 | 10:28 AM IST

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