Changes in duty structure trigger the wave of local production of televisions which makes it advantageous than importing
Brands such as Xiaomi, TCL, Skyworth, BPL and Thomson have started local production at the component stage. In the past few weeks, these brands were importing televisions for sale in the country but have started local manufacturing now.
Even brands like Sony and LG are expanding production of televisions in India at the parts stage. This took place after the government changed the duty structure earlier this year to make local manufacturing cheaper by five per cent to seven per cent. On a local level, the companies are now assembling TV panel as well as manufacturing printed circuit boards (PCB) and moulds.
Increases the import duty to boost local manufacturing
Approximately, all online brands used to import Tv sets on large scale. To reduce import, the government increased import duty on television sets to 20 per cent from 10 per cent which made imports from China, Thailand and Malaysia impractical. To boost the local manufacturing, LG is expanding its Pune factory and TCL has plans to set up an industrial park to manufacture components.
On the other hand, the duty on components was also changed to promote backward integration. The government imposed 15 per cent duty on ready-to-use LED TV panels while duty levied on open cell TV panels reduced to 5 per cent. Open cell TV panels involve manufacturing at the component stage since the TV panel requires further production processes before becoming ready for final assembly.
Brands can save up to seven per cent in manufacturing cost
As per interaction with EconomicTimes, around 35 per cent of the 14 million TV sets sold in India annually are imported. The industry expected that it will come down by half by this Diwali when the Make in India models hit the market. It is also mentioned that brands can save up to 7 per cent in manufacturing cost by locally manufacturing it.
Mike Chen, TCL India’s country head told that the company has plans to set up its own manufacturing plant, open cell panel factory and R&D. Manmohan Ganesh, BPL’s COO mentioned that the local production has just started for 32 and 40-inch sets and will expand to include larger screens and smart TVs.
Industry executive at LG told that it has started open cell TV manufacturing at its Pune plant of 32 and 40-inch units and will do so for larger screen models as well. Sunil Nayyar, MD at Sony’s India confirmed that the company is soon going to start similar manufacturing at the Foxconn plant where it already assembles television sets apart from increasing overall local manufacturing.
Executive at Xiaomi India told that they too have started local production of 32 inches and 43 inches models in India through the open cell process and plans to completely localise production by the end of this fiscal.
However, the industry is concerned that the government may need to bring down import duties on open cell panels to zero per cent to compete against imports from some countries with which India has free trade agreements (FTAs), which mean nil duty if there is any value addition.