• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Richa Mishra

New Delhi , Nov. 21

WITH the Government initiating the exercise for the forthcoming Union Budget, India Inc is also gearing up to voice its concerns.

The consumer electronics industry, for one, has urged the Government to adopt a differential rate of customs duty — the lowest on raw material, higher on intermediate products, and the highest rate of duty on finished products. This according to industry analysts "is also a trend in other countries, including China."

Currently, ustoms duty on the raw materials - colour glass parts, electronics components such as colour picture tubes (CPTs) and colour television sets (CTV) are at the same level of 25 per cent.

"In the last seven years, while the customs duty on CTV sets has come down from 50 per cent to 25 per cent, duty on colour picture tubes has come down only by 5 per cent, and that on glass parts is the same at what it was in 1996-97, 25 per cent,'' industry sources point out.

Elaborating further, corporate sources closely associated with the industry say, colour picture tube is a major input to the CTV industry, constituting almost 50 per cent of the cost of inputs of a CTV. Colour glass parts is a major input of the picture tube segment.

"The major input to glass parts is silicon sand, which is available in abundance in the country and hence needs the least level of protection in terms of customs duty. The present duty structure provides for maximum protection to colour glass parts, thus it does not encourage efficient manufacturing," industry insiders reveal.

Arguing further, they stated that, "In fact, this results in predatory pricing of the colour glass parts. Also, this tariff structure is against the recommendations of the Kelkar Task Force on Indirect Taxes regarding lower rate of customs duty on inputs as compared to the finished products."

As per the ommittee recommendations, the duty on finished product is to be 20 per cent and on its input it should be 10 per cent.

Industry sources further point out that the cstoms duty on colour glass parts of computer display tube is only 15 per cent. Stressing their point the industry officials said, "The price of a CTV set is dependent to a large extent on the price of colour picture tubes, while the price of the picture tubes is dependent on the price of colour glass parts."

Maximum protection given to the colour glass parts industry has resulted in increased price of a CTV set, making it less affordable to the masses. "It also makes the industry non-competitive in the global environment adversely affecting exports of CTV sets and colour picture tubes, for which, there is a huge potential," the corporate sector said.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Anna varsity biotech centre pins hopes on industry tie-ups

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line