The Hindu Business Line : Thailand FTA makes colour picture tube makers see red

THOUGH the date from which the Thailand Free Trade Agreement (FTA) will come into force has been extended to July 1, the apprehensions of the makers of colour picture tubes (CPT), one of the important components for colour televisions (CTVs), are far from over.

With the fear of the inverted duty structure looming large due to the Finance Ministry's decision to roll back the customs duty for glass parts, used for manufacture of picture tubes, the industry yet again proposes to take up the matter with the Ministry for Information Technology (MIT).

Players such as Hotline and Samtel Color have been voicing their concern to the Government on the issue. The Finance Ministry had in January rolled back the customs duty on glass parts from 10 per cent to 20 per cent, barely a week within its move to cut the duty to 10 per cent.

In fact, the industry representatives under the aegis of Electronic Component Industries Association (ELCINA) have just returned from a trip to South-East Asian countries after studying the industry scenario.

Pressing for a level-playing field, Mr V.N. Masaldan, Managing Director, Hotline Teletube & Components Ltd, said, "We would like to submit to the Government a clear picture of what are the ground realities. For example, the cost of production in India is much higher as compared to Thailand. Before entering into any FTA, these aspects have to be factored in."

Elaborating on the cost advantages enjoyed by CPT manufactures in Thailand, industry representatives said, "A-14 inch CPT is priced around $22 (around Rs 962.50), while 20 inch and 21inch are priced at about $37 (around Rs 1,619) and $40 (around Rs 1,750), respectively. This is much lower than the price of the product in India. A 14-inch CPT in India is priced at about Rs 1,400. Domestic companies would find it very difficult to sell their products in Thailand."

The domestic industry is faced with a lot of hidden costs such as electricity, which is more expensive than in Thailand. Further, the tax structure is another handicap that the Indian industry faces, industry representatives point out. While in Thailand there is seven per cent value-added tax (VAT), Malaysia has a sales tax of five per cent, and Singapore has a consumption tax of five per cent. This against the tax structure of 30-35 per cent in India puts the domestic industry at a competitive disadvantage, they argue.

On whether the thinking in the Government circles of bringing glass parts into the fold of FTA helps the industry, the players said, "We do not understand how exactly this is going to help."

The ground reality is that Thailand has the capacity to manufacture 11 million CPTs, of which only 60 - 65 per cent is utilised. However, it has just one plant manufacturing four million units of glass parts, the rest Thailand imports from Malaysia and Singapore.

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