Home / Industry / Manufacturing /  Budget seeks to revive electronics manufacturing

New Delhi: Finance minister Arun Jaitley has proposed a series of measures to boost domestic production of consumer electronics such as laptops and televisions.

He announced a 10% customs duty exemption for parts used in the manufacture of some categories of small televisions and exemption of 4% special additional duty on laptops.

Further, to discourage imports and to provide parity between domestically produced goods and imported goods, Jaitley imposed an education cess of 3% on imported electronic products.

“The duty concession will help revive manufacturing of TVs in the SME (small and medium enterprises) sector and create employment opportunities," said Jaitley.

Colour picture tubes, as well as LCD and LED panels with screen sizes of less than 19 inches, will escape basic customs duty, bringing down prices of cathode ray tube TVs (CRTs) by 150-300 and small flat screen TVs by 300-350.

“Cathode ray TVs are used by weaker sections who cannot afford to buy more expensive flat panel TVs," Jaitley said.

According to Atul Lall, deputy managing director at Dixon Technologies, a leading electronics manufacturing services provider, “India is a very low-end market and we need affordable products... It is a prudent move by the government."

Suresh Khanna, secretary-general at CEAMA (Consumer Electronics and Appliances Manufacturers Association), agreed: “The CRT market was fast shrinking... this move will give some lease of life to this market and will predominantly help small businesses that are manufacturing them in the country."

These measures are expected to help home-grown companies such as Videocon, Weston India, Mirc Electronics, the maker of Onida brand, and Salora International which manufacture CRT and LCD televisions.

Though the duty exemption may help some manufacturers and persuade more people buy television sets, the government has not made any changes to the largest category of TV sets—the standard 32-inch models which make up 60% of the market.

“In the Union budget 2014, CEAMA recommendations like reduction of custom duty on LCDs and LEDs below 19-inch from 10% to 0%, have been accepted, which will encourage local production," said Manish Sharma, managing director, Panasonic India.

“These reforms coupled with the extension in the time period of reduced excise duty and exemption of flat copper wires from excise duty will further boost the future growth and the economy," he said.

“It will encourage greater value addition in the manufacturing of LCD/LED TVs in the country," said Anirudh Dhoot, president, CEAMA and director, Videocon.

While consumers have moved to flat panel TVs worldwide, 3.5-4 million CRTs are sold in India every year, out of the total 13 million TVs sold in a year.

Sales of flat panel TV sets are growing at 30% every year and are estimated to cross 9 million units by December 2014, according to CEAMA.

The budget also proposed an investment allowance of 15% to a company that invests more than 25 crore in any year in new plant and machinery.

This benefit will be available for three years, for investments up to 31 March, 2017.

“The incentives to invest in manufacturing should help increase the manufacturing base in India," said Gaurav Gupta, senior director, Deloitte Touche Tohmatsu India Pvt. Ltd. “The investment allowance for companies which are investing more than 25 crore in plants or through machinery, is a big boost for indigenous manufacturers. This will boost investment in indigenous industry to overcome cheap, low-cost imported products including all kinds of consumables and LEDs needed in the country to boost electric energy saving. The demand for these products is growing all round the country," said Ved Prakash Mahendru, chairman and managing director, Eon Electric Ltd.

“Further impetus to innovation, entrepreneurship and focused development of industrial corridors will drive domestic employment generation and economic upliftment. Fostering growth and reducing fiscal deficit have been the cornerstone for this year’s budget," said Sunil Lalvani, managing director, BlackBerry, India.

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