TV manufacturers have expressed unhappiness over the Goods and Services Tax (GST) Council’s decision to reduce rates on televisions with small screens upto 26 inches stating that the move will not benefit the industry and should be extended to big-screen TVs.
The manufacturers, through their industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA), have approached the Finance Ministry and suggested two slabs — televisions of screens up to 43 inches to fall into 18 per cent rate and those above 43 inches to remain in the 28 per cent slab.
CEAMA’s letter, seen by BusinessLine, said though the industry does appreciate the decision of the Council, GST reduction on TVs up to 68 cm (26 inches) to 18 per cent, from 28 per cent, has come as a ‘surprise for the entire television industry’ as it will have no benefit for the industry, as manufacturers today hardly make TVs of upto 68 cm.
Today, about 65 per cent of the TV market comprises sizes ranging from 80 cm (32 inches) to 142 cm (43 inches), which is a category most preferred by lower/middle income group, CEAMA said.
“A communication from CEAMA has been received and their demands are being considered,” a Finance Ministry official told BusinessLine , adding that any decision in this regard can be taken only by the GST Council.
The industry letter also said that there are only 8 open cell glass panel manufacturers in the world — Samsung, Innolux, Panda, LG, BOE, AUO, CSOT & HK — of which six had already stopped production of open cells for the approved category as the demand for 68 cm category is almost ‘nil’.
In fact, the association has strongly advocated for lowering GST to 18 per cent from 28 per cent for products falling in category upto 43 inches. “Television is not an item of luxury rather it is a medium of entertainment and communication and it is a common man’s product,” it felt.
It has been argued that the reduction will be revenue neutral as higher sales will offset loss from reduction of tax rate. “ACE (Appliance and Consumer Electronics ) categories thrive when disposable income increases or when prices are affordable. This was witnessed in 2009 when the government reduced excise duty as part of a stimulus package,” the association said. It also said that such a move will provide stimulus to manufacturing of TV sets in India and thus fulfilling the dream of ‘Make in India’.
When contacted, CEAMA President, Manish Sharma, said in the past one-and-half years, growth in the TV segment has slowed down to single digits to about 7-8 per cent. In previous years, between 2013 and 2015, the TV segment was witnessing strong double digit growth of 18-20 per cent. “So lowering the rate of GST on TVs of upto 50 inches to 18 per cent will give an impetus to the industry and increase the penetration and affordability of these products,” he said.
Echoing the same sentiment, Eric Braganza, President, Haier Appliances India, said globally panel prices have increased and the industry is also facing challenges of currency fluctuations. “To offset these costs, companies will need to increase prices of larger-sized LED TVs, unless GST is reduced on these larger-sized TVs too,” he said.