Watchmakers demand sops

The domestic watch industry has demanded sops from the government to help it improve its competitiveness and achieve its objective of every Indian having at least one watch.

Among the demands of the industry are increase in abatement rate on watches from 35 per cent to 50 per cent, rationalisation of duty structures and curbing of illegal imports.

"We are seeking the government's support to increase the affordibility of watches for the common man and improve the performance of the domestic industry," said VD Wadhwa, vice president and secretary general, All India Federartion of Horological Industries (AIFHI) and senior vice president (corporate affairs & business development), Timex Watches Ltd.

With a penetration level of of 25 watches per 1000 people as compared to a global average that is 10 times larger, the opportunity for the industry remains large.

Yet, the domestic watch industry is projected to sell only 4.01 crore watches in 2006 as compared to 2.3 crore watches in 2000.

"The current abatement factor of 35 per cent does not recognise the significant increase in the non-manufacturng costs, thereby leaving the industry to pay higher excise duty on 65 per cent of the maximum retail price despite having manufacturing costs significantly lower at about 50 per cent," said Harish Bhat, president, AIFHI and COO, Titan Industries Ltd.

The watch industry has also demanded that excise duties be reduced from the current rate of 16 per cent to 8 per cent apart from removingt excise on watches priced below Rs 500 and reduction of value added tax inline with the structure for mobile phones at 4 per cent.

With just 38 per cent of the Rs 2,746.3 crore market belonging to the organised sector and smuggled watches and components continuing to be the biggest challenge to the domestic watch industry, they have demanded that illegal imports be curbed by reducing import duties on watches priced above Rs 5,000.

"Curbing illegal imports of watches and components would increase government revenues by 250 per cent to over Rs 770 crore and increase sales to Rs 4,750 crore in the next three years," said Bhat.