Additional burden would result in a major slowdown of industry: CETMA

Our Bureau

Facing threat

Government urged

to address issue of high taxes in local market

Cheaper imports

to adversely affect industry

New Delhi, June 7

Consumer electronics manufacturers have come out strongly against a Government proposal to introduce a licence fee on colour televisions to fund public broadcaster Prasar Bharti, stating it would hit sales and proposed investments in the sector.

"This will be damaging for the television industry and will put it under severe pressure,'' the Consumer Electronics and TV Manufacturers Association (CETMA) said.

The association said any ``additional burden'' would result in a major slowdown of the television industry, already reeling under heavy taxes, and would encourage sales in grey market.

In order to make cash-strapped public broadcaster Prasar Bharti financially viable, the Government is now considering a variety of proposals. CETMA said one of these includes levy of a licence fee of 10-15 per cent ad-valorem on purchase price of CTVs.

High taxes

The association also asked the Government to address the issue of high taxes in the local market as televisions are included in the early harvest scheme of the Free Trade Agreement (FTA) with Thailand, which would mean no duty on imports from Thailand from September.

"Total taxes on TVs in India is about 35 per cent, while the total level of taxes in Thailand is about 7 per cent. This makes manufacturing in India an expensive proposition and is hurting domestic makers,'' said Mr Gulu Mirchandani, Chairman, Mirc Electronics.

"If imports are cheaper than manufacturing locally, it will literally kill the industry and force small manufacturers to shut shop,'' he said.

Thailand now makes about 17 million CTVs, of which, 15 million are exported, while India makes 10 million, of which, only 1 million are exported at present.

If the levy is imposed, many small TV manufacturing units will be forced to close down due to decline in demand rendering people unemployed, CETMA officials pointed out, adding that already Japanese consumer electronics makers such as Sony and Panasonic have scaled down their India operations and are importing from Thailand.

(This article was published in the Business Line print edition dated June 8, 2006)
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