In a recent attempt to encourage local production and assembly of Televisions in India, the government slashed the import duty on Open Cell Panels necessary for manufacturing LED TVs. The import duty, which was 5% earlier, has now been completely eliminated. The open cell panels are a major component of TVs. The reduction in duty is supposed to reduce the price of TVs by around 3-4% according to market experts. However, the effects will not be seen instantly. In fact, the upcoming festive season will not see a price drop for the TVs.
It is that time of the year when almost everybody in India is gearing for the festive season ahead. The country rejoices in the celebrations that take place in most of the places in the country for various festivals carrying various degrees of significance. However, the one thing that is common in all of the festivals all over the country is shopping. The festival can be of any specific religion but people from all faiths celebrate almost equally. They shop either online or offline for either personal or gifting purposes. These festivities offer reasons to be happy and spend some money apart from just the daily necessities.
Talking of the shopping scene, the Indian market is fascinating with millions of customers spending billions of Rupees each year. The market’s strength lies in the sheer number of people in the country as it combined offers one of the largest and most diverse markets in the world that has the potential to consume almost every product available in the world. This induces a fair amount of confidence into the brands doing business in the Indian market.
The TV market has witnessed a mixed growth rate in the past few years. While the introduction of smart TVs with OS and internet connectivity seemed to be ground-breaking developments in the TV industry resulted in sales surge, the increasing popularity and functionality of the modern smartphones result in declining TV sales. One of the major reasons is the consumers’ shift from traditional content to the OTT platform and their contents, which can be viewed easily on smartphones.
This festive season, there are a few major factors play that has made the TV industry players quite sceptical of the sales. The reasons are:
- Slow Economy – Although the Indian Economy is growing at 5% according to recent statistics, which is greater than most of the countries but according to India’s standards, it is slower. This will hurt the sales of TVs this festive season.
- Availability of Affordable and Good Screen Gadgets – The good quality smartphones, laptops and tablets has started eliminating the need to have a TV in many households. Especially, young people prefer a smart gadget instead of a TV, due to the latter’s non-portability.
- No Reduction in TV prices during the Festive Season – The manufacturers have claimed that the whole stock for the festive season has already been sent to the online and physical stores respectively even before the reduction in the import duty came into existence. The price of the existing TVs have been set according to the previous import duty and the new price will only start showing up in or after November.
Impact on major brands
The major electronics manufacturing companies who have their business spread across numerous countries find ways to dodge most of the laws. The 5% import duty that was imposed on the open cell panels has Samsung take a new route to bypass the law. Samsung, the largest consumer electronics and home appliances manufacturer in the world is one of the largest players in India. The 5% duty was hurting their profits, so they stopped production and assembly in India. They very cleverly started importing the finished goods from Vietnam at a 0% rate. Interestingly, India has signed a Free Trade Agreement with Vietnam. This was a method that many other companies followed suddenly after Samsung. The government soon understood that the 5% tax was hurting the Indian economy more than it was doing good. The recent removal of the import duty will encourage TV manufacturers to come back to the country and start manufacturing and assembling as well.
Further Changes in the Rules
There is a talk making the rounds in the market that the GST on TVs might be reduced in the future to boost the sales. Currently, the GST stands at 18% for the TVs up to 32 inches in size and at 28% for the TV over 32 inches. The TV industry players are urging the government to reduce the rate. The reduction in the rate will significantly reduce the overall rate of TVs eventually attracting more and more consumers to purchase the bigger TVs which obviously cost more than the smaller ones.