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TV prices set to rise again as govt considering customs duty hike on open-cell panels

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The government wants to incentivize local manufacturing by increasing customs duty. The plan is to increase the duty by up to 12 percent in three years from the current 5 percent. In Sept 2019, the CBIC had said there will be no hike in customs duty if manufacturers develop domestic capacity

Open-cell panels are used in manufacturing television screens and are imported from China. The plan is to increase the import duty gradually to 10-12 percent over the next three years, The customs duty currently is 5 percent.

In September 2019, after requests from television makers, the Central Board of Indirect Taxes and Customs (CBIC) announced that there would not be any customs duty on open-cell panels, provided manufacturers develop domestic manufacturing capacities in a year’s time.

TV manufacturers have been unable to set up local manufacturing capacities for panels so far. The Coronavirus outbreak and subsequent lockdown also hampered their plans.

“It will be a gradual increase every year. The idea is to nudge TV brands to manufacture these components locally. They have been given time since 2019 to build local capacities," said an official.

This will be the third time in a row in 2021 that the prices of TV sets will go up. Considering the increase in panel prices, TV prices went up in January and April.

 had reported earlier about the rise in prices of television sets by 10-30 percent from April 1 as all the Chinese panel manufacturers hiked their rates.

"We had requested the government to have zero duty for open-cell panels but their mandate is that the ‘make-in-India’ initiative must get a fillip. This sentiment is valid but there should also be financial incentives provided," said the vice president-India at a global white goods firm.

Over and above the customs duty, there is the Goods and Services Tax (GST). TV sets up to 32 inches are levied 18 percent GST while those above 32 inches attract the maximum of 28 percent.

Prices of TV sets most volatile

Since the Coronavirus outbreak, prices have seen an increase almost every quarter. Initially, the price rise was on account of a manufacturing shutdown in China, but it continued even after the demand-supply situation stabilized.

All TV makers in India import open-cell panels from markets like China. Despite requests from manufacturers to extend a zero-customs-duty regime, the government decided to impose a 5 percent customs duty.

Large television brands in India include Samsung, LG, Sony, Thomson, Kodak, Vu, Mi, and OnePlus.

When the COVID-19 outbreak was first reported in Wuhan, China, in the last week of December 2019, TV makers were the most worried. Since China supplies panels which are the key components to manufacture televisions, there were fears of raw material shortage.

Their worst fears came true in January 2020, when production came to a standstill across manufacturing hubs in China. This led to an acute shortage of components like panels, leading to a price increase of 10 percent in February 2020 itself.

“The last two years (2020 and 2021) have been the worst for the TV industry in India. There should be temporary relief at least till the COVID-19 situation normalizes," said Akhilesh Tripathy, a Mumbai-based electronics dealer Vipul Electronics.

The industry has sought either an immediate slashing of GST rate or removal of duties on open-cell panels for the next two years.

As the year progressed, India also imposed a lockdown from March 25, halting production activity across the country. On the one hand, there was a component shortage, while, on the other, there was a scarcity of TV sets as well.

Amidst manufacturing slowly crawling back to normal from June onwards, a July 30 notification by the Directorate General of Foreign Trade (DGFT) placed the import of color television sets of all sizes in the restricted category. High-end TV sets that are 80 inches and above are typically imported from other markets.

During the same time, anti-China sentiments stayed strong with the India-China clash in Galway Valley leading to the death of 20 Indian soldiers. Components and finished goods from China were under thorough scrutiny since then, leading to production delays in India. Another shocker came in September in the form of rising in TV panel prices, ahead of the Diwali sales season. This led to an almost 25 percent price increase.

This was quickly followed by the re-imposition of the 5 percent customs duty on open cells from October 1 onwards. Meanwhile, the rise in panel prices continued and prices of TV sets also continued moving northward.

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