The levy has been implemented despite repeated requests from the industry to defer it.
The government aims to foster domestic manufacturing of open cells for televisions in India through this move, as it promotes the Atmanirbhar Bharat program.
“While this could entail increased costs for some TV manufacturers, a duty leverage could incline TV manufactures for procuring or manufacturing domestically produced open cells and thus, advance the make in India initiative of the government,” said Abhishek Jain, partner indirect tax at EY.
The sop was offered for a limited period of one year till September 30 in anticipation that the industry would build capacity for manufacturing critical components in India and move towards value addition from mere assembling, but that has not happened.
Government also feels that domestic industry should invest more in local manufacturing since it has been given adequate protection with 20% customs duty on imports of fully made TVs since 2017 and certain categories of TV imports have been put in the restricted category since July this year.
Expectations are that imports of television parts will rise, from Rs 7,500 crore in a year, as imports of fully made TVs are curbed.
Television makers have argued that prices of fully built panels have risen 50% and customs duty of 5% on open cell – a major component for TVs – would lead to increase in sale prices by a minimum of Rs 600 for a 32-inch television, Rs 1,200-1,500 for a 42-inch TV and even higher for large-screen televisions.
But government officials have dismissed these statements saying that the price increase due to this duty will be insignificant, not more than Rs 250 per television.