Centre’s Initiative to Enable Affordable Large-Screen TVs and ACs in India
The Government of India is embarking on initiatives to make large-screen televisions (TVs) and air conditioners (ACs) more affordable and locally produced. This strategic move, driven by new incentives, revisions to customs duties, and public procurement programs, aims to bolster the local electronics and appliances industries.
Key Initiatives
Abolition of Customs Duties on TV Open Cells
- Current Status: Duties on open cells for television panels were reduced from 5% to 2.5% in 2023.
- Proposed Change: The Ministry of Electronics and Information Technology (Meity) plans to completely remove these import duties to significantly reduce the cost of large-screen TVs in India.
Public Procurement Programs
- TVs Above 32 Inches: A public procurement program is in development to boost the televisions industry.
Reduction in GST and Custom Duties
- Plastic Molding for TVs: Meity has proposed new customs duties.
- GST on Local Manufacturing: Plans to reduce GST on local manufacturing of display panels from 28% to 18%.
Production-Linked Incentives for ACs
- Extension until Month-End: The production-linked incentives program for white goods, including air conditioners, will continue.
Collaborative Efforts
The implementation plan involves collaboration among multiple ministries, including:
- Ministry of Commerce
- Ministry of Finance
This unified approach aims to establish India as a significant export hub for televisions, enhancing domestic value addition from 28% to 45%.
Strategic Goals
Localizing Display Components
- High-Value Electronics Industry: Meity is focused on localizing the manufacturing of displays and their components.
- Setting up Pure-Play Display Fabs: Meity, alongside the India Semiconductor Mission (ISM), is evaluating applications for setting up specialized display fabs.
The crucial components, such as display panels and open cells, constitute nearly 50% of the bill of materials (BoM) cost for TVs. Localizing these components is vital as they are predominantly imported from countries like China, Taiwan, Vietnam, Thailand, and Malaysia.
Industry Insights and Trends
- Market Expansion: Reducing import duties is expected to lower prices, expanding the domestic TV market.
- Local Assemblies: Contract manufacturers like Dixon Technologies are working on setting up local assemblies for TV panels.
Market Data
- Market Size: The domestic TV market is estimated at $6.5 billion, with an average TV price of $460.
- Market Leaders: Samsung and LG lead the market, followed by Xiaomi and Sony.
Center-Driven Initiatives
Over the past decade, the Centre has enabled holistic local assembling programs for TVs and ACs. While nearly all TV units sold in India are locally assembled, most core components are imported. The push for localizing these components aims to retain more of the revenue within the country.
Long-Term Vision
- Establishing India as an Export Hub: The strategy involves first solidifying India as a domestic manufacturing hub.
- Incentivizing TV Technologies: Assessments for proposals to set up display fabs are underway, focusing on advanced TV panel technologies.
Next Steps and Pending Details
Collaboration Across Ministries
The Ministry of Electronics and Information Technology (Meity), along with the Ministry of Commerce and the Ministry of Finance, is working collaboratively to ensure the seamless implementation of these initiatives. This multi-ministry approach aims to strategically position India as a leading hub for electronics manufacturing, further reinforcing the country’s international trade capabilities.
Enhancing Domestic Value Addition
By increasing the domestic value addition in television manufacturing from 28% to 45%, these efforts will significantly enhance the local industry. This shift is crucial for ensuring that a larger share of the revenue generated from TV and AC sales remains within India, thereby strengthening the local economy and fostering technological innovation.
Key Benefits and Industry Impact
TVs:
- Cost Reduction: The abolition of customs duties on TV open cells will reduce manufacturing costs, leading to lower consumer prices.
- Market Expansion: More affordable prices are expected to broaden the domestic market.
- Increased Local Manufacturing: Encouraging local assembly that includes core components like display panels.
Air Conditioners:
- Extended Incentives: The extension of production-linked incentives will continue to support local manufacturers, boosting overall production efficiency and cost-effectiveness.
Strategic Goal: Establish India as a Global Export Hub
The overarching goal is to transition India from being a mere assembly location to a comprehensive manufacturing and export hub for high-value electronics. This vision is aligned with broader economic strategies to elevate India’s standing in global markets.
Ongoing Assessments and Future Outlook
Meity and the India Semiconductor Mission (ISM) are currently evaluating various proposals to establish display fabs. This assessment process is pivotal in ensuring that only advanced and high-technology TV panel solutions are incentivized, guaranteeing a competitive edge on the global stage.
Expert Insights
Industry analysts and experts acknowledge the critical importance of these moves:
- Tarun Pathak, Research Director at Counterpoint India: Emphasizes that the reduction in import duty will help in price reduction and market expansion, with long-term plans focused on higher local value addition.
- Sunil Vachani, Chairman of Dixon Technologies: Confirms active steps toward setting up local assemblies for TV panels, reflecting the industry’s commitment to this transition.
Data and Market Share
- Market Value: As of last year, the domestic television market was valued at $6.5 billion.
- Average TV Price: Around $460, with Korean manufacturers Samsung and LG dominating the market, followed by Xiaomi and Sony.
Recent Trends and Developments
The electronics and appliances industries are on the cusp of transformative growth, driven by government initiatives and global market dynamics. Businesses looking to navigate this evolving landscape will find significant opportunities for expansion and increased competitiveness.
Closing Insights
Through these targeted initiatives, India is well-positioned to elevate its global standing in the electronics sector. By reducing import duties, extending incentives, and localizing manufacturing, the country aims to achieve:
- Economic growth and technological advancement.
- Strengthened domestic industries.
- Enhanced global trade relationships.
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Key Takeaways
- Policy Changes: Abolition of customs duties on open cells and extended production-linked incentives.
- Economic Impact: Potential for significant cost reductions and market expansion.
- Value Addition: Increased local manufacturing leading to higher domestic value retention.
- Strategic Position: Positioning India as a global manufacturing and export hub for electronics.
Conclusion
The Indian government’s multifaceted plan to bolster the local electronics and appliances industries is poised to make large-screen TVs and ACs more affordable. By reducing customs duties, extending incentives, and fostering local manufacturing, India will strengthen its position as both a domestic and global player in the electronics sector. This initiative not only stands to benefit the local economy but also promises to make advanced electronic goods more accessible to the broader population.
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