Customs exemption on open-cells for LED panels: Government studying extension plea

The zero customs duty on open-cells for LCD/LED panels used for televisions may get a temporary extension. The government is studying a proposal to extend the nil duty by another six months. Currently, this is valid till September 30.

Imposition of customs duty would lead to an immediate hike in prices of televisions. This is because open cell is what makes the LED/LED screen of a television function effectively. The entire open-cell component is imported from South-East Asian markets.

LED TVs comprise one of the largest segments under the entire domain of Appliance and Consumer Electronics, accounting to a volume of almost 15 million with an estimated sale value of almost Rs. 40,000 crore.

"While the emphasis is on Make in India, the government is cognisant of the fact that key components for products like televisions do not have local manufacturing capacity," said an official.

In September 2019, the Ministry of Finance had said the open-cells for LCD/LED panels will not attract any customs duty. The ministry had said that it will be valid till September 30, 2020 post which local manufacturing of open cell could be incentivised.

In her Budget speech, Finance Minister Nirmala Sitharaman said that it has been observed that imports under Free Trade Agreements
(FTAs) are on the rise.

"Undue claims of FTA benefits have posed threat to domestic industry. Such imports require stringent checks. In this context, suitable provisions are being incorporated in the Customs Act. In the coming months we shall review Rules of Origin requirements, particularly for certain sensitive items, so as ensure that FTAs are aligned to the conscious direction of our policy," she had said.

It is to be noted that televisions are also a category where FTAs are being used in a small way to source products/parts from outside. This will also be under review.

She also said that the custom duty exemptions shall be comprehensively reviewed by September, 2020 for taking a view on their relevance.

Currently, the zero customs duty is applicable for open-cell (15.6 inches and above) used in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panels. Further, components like the chip on film, printed circuit board assembly and cell used in LCD/LED TV panels will also be exempt from customs duty.

Open-cell is a critical component used in manufacturing television sets. At present, there is no local manufacturing of open cell in India so a higher customs duty meant that TV prices stayed high.

The LED TV industry is also one of the biggest employers with estimated employment of 50,000 people directly and many more indirectly through the ancillary units.

The industry has sought a policy to enable phased manufacturing of TVs and end-to-end manufacturing of televisions in the country.