India’s free trade agreement (FTA) with the Asean is adversely impacting domestic production of televisions (TVs) as it is cheaper to import finished products from FTA nations. Currently, most of the components used in making TVs like open cell, panels and other parts have to be imported as the ecosystem for producing them domestically is still not developed, but the government has levied a basic customs duty (BCD) on them since December 2017.
For instance, there is a BCD of 5% on open cell and 15% on panels. Since these components constitute a major part of TVs’ production value, making the product in the country has become unviable. Apart from this, there is a 10% BCD on parts used in making TV panels. In contrast, there is no duty on import of finished TVs from Asean countries.
As a result, Samsung has already stopped manufacturing TVs in India and shifted a big part of its manufacturing capacity to Vietnam. Many other companies are also exploring the option to shift manufacturing to Asean countries. According to industry executives, Samsung is now importing most of its TVs from Vietnam. A lot of other multinational and Indian companies have also set up their manufacturing units in Vietnam. Therefore, import of TVs from Vietnam has jumped multi-fold in value terms to `2,317 crore in 2018-19 from Rs 62 crore in 2017-18.
As per information available with the Ministry of Electronics and Information Technology (MeitY) currently there are around 38 units manufacturing LCD/LED TVs in India. Some of the big companies making TVs in India are Sony, LG, Panasonic, Dixon Technologies, Philips, Havells, Haier, etc. Besides Asean FTA, domestic manufacturers also suffer because of high finance, logistics and power costs.
The electronics industry had sought imposition of provisional duty on imports from Asean countries. In fact, MeitY had also requested the finance ministry to take appropriate action for providing a level playing filed to local manufacturers and to check zero-duty import of TVs.
In a recent letter to the government, the Indian Cellular and Electronics Association said television manufacturing in India was under a grave threat. “There is a huge and sudden rise of imports from Vietnam. The closure of Samsung plant in Tamil Nadu is sending shock waves in the TV industry…we are in extremely grave situation,” Pankaj Mohindroo, ICEA chairman, said in the letter.