The Hindu Business Line : Excise duty hike may hit black & white TV market

HAS the Finance Minister, Mr P. Chidambaram, further distanced the black & white television (B&W TV) from the reach of rural consumers by increasing excise duty on it?

According to industry analysts, "The increase in excise duty on B&W TVs, which has been facing negative growth, will widen the gap between the consumer and the product."

The Budget proposal is likely to hasten the shrinkage of the B&W TV market, which caters primarily to low-income households. The segment closed last year (2003) with a sale of 3 million units, and during the current year, the industry was targeting a sale of 2.5 million units. The total size of the global market for B&W TVs is estimated at 8 million units as of 2001, and India alone accounts for nearly 45 per cent of it.

"The proposal to raise the excise duty from 8 per cent to 16 per cent will now squeeze the market further. The anticipated price increase would be around Rs 125. At present, a 14-inch B&W TV set is priced in the range of Rs 1,600 - Rs 2,000, " a Consumer Electronics and TV Manufacturer Association (CETMA) official said.

An entry-level colour television (CTV), mainly belonging to regional brands, is priced at Rs 4,500. Currently, the major players in the B&W TV market include Onida, Videocon, Oscar, Beltek, and Salora. Though the Budget proposal continues to give SSI exemption to manufacturers of the product, there are hardly any small-scale manufacturers in the segment.

According to ICRA, as of calendar year 2002, the total television market comprised 7.5 million CTV sets and around 3.6 million B&W TVs. The B&W TV market, consisting mainly of 14 inches had begun to shrink in the early 1990s, but revived temporarily with an exemption from excise granted by the Government in 1994.

While agreeing that the shrinking demand is attributable to a larger number of middle-income households going in for first or second hand purchase of CTVs rather than B&W TVs, ICRA feels an important demand deterrent has been the increase in excise duty on B&W TVs and B&W picture tubes. The re-imposition of the 4 per cent excise duty on B&W TVs in the Union Budget 2001-02, and the increase in excise duty to 8 per cent in the Budget for 2002-03, and now to 16 per cent, will lead to a further fall in demand for the product, the analysts pointed out.

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