The resumption of the 5% import duty on open-cell panels, the key component used during the manufacturing of TV sets, will massively add pressure on the TV industry. It will hugely influence the price of TV sets all over India too.
Open-cell panels form as much as 65% of the total production cost of TV sets and now, they will attract 5% import duty from October 1st. The duty exemption on importing of open-cell panels will expire at the end of this month and it hasn’t been extended as the government pushes to expand domestic manufacturing.
According to industry insiders this puts additional pressure on TV manufacturers, who are already under stress after the huge market disruption during and post COVID-19. “This may make domestic manufacturing uncompetitive and expensive. The imposition of duty may have an impact on the overall pricing of TVs”, said Kamal Nandi, President, CEAMA (Consumer Electronics and Appliances Manufacturers Association) .
TV is easily one of the largest segments under the entire domain of Appliances and Consumer Electronics as it accounts for an estimated sale value of over ₹25 crores. “The TV industry is one of the biggest employers with estimated employment of over 40,000 people directly and many more indirectly through the ancillary units”, said CEAMA.
While the government officials estimate the impact of duty to translate to ₹150 – ₹200 per TV set, manufacturers say that end-consumer prices can go by as much as ₹400 – ₹1200 depending on the size of the TV set.
As part of the “Atmanirbhar Bharat” strategy, the government is very keen to expand the domestic production for open-cell panels as it actively seeks to curb imports.
CEAMA also said that the move would add pressure to the industry that is already struggling as things are slowly getting back to normal post-COVID and there is still COVID-induced pressure on consumer demand.
India is about to enter the crucial festive period that presents a significant quantum of sales for such companies.
Even retailers are worried about the negative impact of price hike in these challenging times. “It’s not a very good thing that is going to happen to businesses and the electronic business already has suffered enough during the lockdown. It may decrease the sales and business,” said Mr. Suhail Yusuff who owns a Sony showroom in Bengaluru.
However, he was of the opinion that ultimately, the sales will depend on how the consumers react to the change, their income, and how they’re getting on with life post-lockdown. Currently, a lot of people are struggling with their jobs and this has made it hard for them to invest in any costly purchases like TV sets.
“The consumer’s income will have to be higher to pay the bigger price. In the current situation, a lot of people are without jobs and their savings are getting over day by day, and this is definitely a big negative for us.”
When asked if he and his showroom is going to take any measures to tackle this problem, he said “We will have to come up with a solution because we have to take care of ourselves and survive (in the post-COVID business market).”
With India – China border tension already affecting the supply of TV components from China, this resumption of import duty is further expected to dampen the festive cheer for retailers and E-commerce players.