Panel prices are on the rise on one hand, while the zero customs duty on this key component for televisions is set to end.
Television sets could become costlier right at the onset of the festive season in October. According to industry sources, the price increase could range between 20-35 percent and will primarily because of a spike in prices of panels that are a key component of the television set.
The price increase will be a dampener for customers who were looking to postpone purchases till Navratri, Diwali sales. About 60 percent of the price of the television is the cost of the open-cell panel that makes the screen.
Sources said a few panel makers are also creating 'artificial shortage' scenarios to hike the prices. Panels are imported mostly from China. A Delhi-based dealer said the sudden inventory shortage has been communicated to several companies just weeks ahead of supply.
The head of the televisions category at a large white goods firm told Moneycontrol that this year's festive sale could see lower discounts due to a sudden rise in panel prices.
"We will have to pass on the cost increase to customers because TV panel prices are rising by 20-25 percent. Slowdown and aggressive demand are being cited as the reason for the price rise," he added.
The consumer durables industry was eyeing festive season sales because the Coronavirus-led lockdown had impacted revenues. TV prices have already been up to 10 percent hike this year due to production disruption of components in China.
Panel prices have risen by 20 percent over the last few weeks. Every year ahead of the festive season, the demand hike leads to a price increase in panels. This year, Coronavirus-led product shortage has added to the price hike.
The open cell panel used in TVs is imported from markets like China. With production in China almost shut, the export of this component had been halted till April, which impacted the production of the final product in India.
Avneet Singh Marwah, CEO, Super Plastronics which is the licensee of Thomson TV and Kodak TV in India said prices could go up by as high as 35 percent.
“Whenever there is a price rise, small screen sizes sale always gets affected. But on the other hand, due to the pandemic, we are seeing continuous growth in smart television sales since customers are at home,” he added.
An added pain to the pricing would be a comeback of the 5 percent customs duty on open-cell panels. In September 2019, the Ministry of Finance had said open-cells for LCD/LED panels will not attract any customs duty.
The ministry had said it would be valid till September 30, 2020, after which local manufacturing of open cells could be incentivised. The zero customs duty is applicable for open cells (15.6 inches and above) used in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panels.
Moneycontrol had reported that the government wants to boost local production and hence is not looking to extend the zero-customs-duty regime for the open cell.
Arjun Bajaaj , Director, Videotex International that has the Daiwa and Shinco TV brands in India said that television prices are expected to go up by 20-30 percent and may go beyond that if the prices for open-cell continue to increase.
“In case the custom duty of 5 percent on an open cell is added next month then again the prices will be impacted. So far with the increase in price, there is also a huge shortage in supply of open-cell but the demand has been rising consistently for TVs,” he added.
A complete import of television sets is also not an option, since the Indian government has dissuaded players from importing TV sets. The duty for importing a completely built unit of an electronic appliance is set at 20 percent.
Further, Directorate General of Foreign Trade (DGFT) in a July 30 notification placed import of colour televisions of all sizes in the restricted category. Those looking to import TV sets need a licence.Moneycontrol had reported that import licenses would be very selective and that the process would be lengthy.