In a bid to boost local manufacturing of open-cell for LED/LCD screens, the government is looking to hike the customs duty for importing these components.
Sources told Moneycontrol that the plan is to increase the import duty gradually to 8-10 percent in the next three years. The customs duty currently is 5 percent.
A direct impact of this will be that television makers importing these products would increase prices of TV sets by close to 5 percent.
Panel prices are already on the rise since manufacturers have increased prices by 20-25 percent since September. About 60 percent of the price of television is the cost of the open-cell panel that makes the screen.
From October 1, the customs duty on open-cell panels was hiked to 5 percent from zero. The Central Board of Indirect Taxes and Customs (CBIC) had said in a notification that zero customs duty for open-cell panels, valid between September 2019 and 2020, had come to an end.
“Large multinational players have been encouraged to set up local manufacturing facilities through schemes like Production-Linked Incentive (PLI). We want India to slowly become the manufacturing hub for electronic products and components,” said a senior government official.
All TV makers in India import open-cell panels from markets like China. Despite requests from manufacturers to extend zero-customs-duty regime, the government decided to impose a 5 percent customs duty.
In September 2019, after requests from television makers, the CBIC announced that there would not be any customs duty on open-cell panels. However, it clarified that manufacturers must work towards developing domestic manufacturing capacities.
In this one-year duration, TV manufacturers were unable to set up local manufacturing capacities for panels. The Coronavirus outbreak and subsequent lockdown also hampered these plans.
“We had given time as well as financial incentives to make in India. We are hopeful that a slight push in the form of higher customs duty would aid in manufacturing open-cell panels in India,” said another official.
PLI scheme nudge to produce locally
The Cabinet approval to the production-linked incentive (PLI) scheme on November 11 is expected to boost local manufacturing of white goods in India. The idea here is that key components like open-cells and compressors which are imported from markets like China would now be produced in India.
The total allocation under PLI would be Rs 1.46 lakh crore over five years, according to a government statement. Of this, Rs 6,238 crore has been set aside for white goods, including products like air-conditioners and LED lights.