Television manufacturers may be caught in a tricky situation post government's move to scrap 5% duty on open cell for panel TVs. This decision by the Ministry of Finance, ahead of the festive buying season, is likely to result in TV prices dropping by up to 4% and that has left consumer electronics companies thinking – whether to pass on the benefits with immediate effect or clear the festive inventory first and implement the price cut thereafter.
Speaking to DNA, Manish Sharma, president and chief executive officer (CEO), Panasonic India, said, the import duty cut will bring down the prices of TVs by 3% to 4%. "Currently, we are evaluating the weighted impact of the duty cut decision. Our intention is to pass on the price advantage as soon as possible to the end consumer. The overall objective is to start to catalyse the growth in demand. Definitely, the situation will not be to sit and wait for the existing inventories to be liquidated and the new inventory to get into the system.
"Having said that, since all of this has to follow a process, companies are likely to take some time to discuss with trade channels, evaluate the existing inventory in the system and eventually take a final call about passing on the benefits to the consumers. We are also evaluating this entire impact and will take a call to pass on the advantage to the consumers as quickly as possible," he said.
Most TV manufacturers have already imported the open cell keeping the festive buying season in mind. As per data compiled by import-export platform Connect2India, approximately $145.53 million worth of open-cell TV panel (HS Code: 85299090) was imported in July 2019. This figure was $109.85 million in June 2019, $104.21 million in May 2019 and $87.31 million in April 2019.
"High import in the last three months seems to be due to advanced planning for the upcoming festive season," said Pawan Gupta, founder and CEO of Connect2India.
This is a clear indication that 5% import duty is already factored in the cost of all the TV inventory currently offered in the market. Besides, the pre-planned big bonanza TV sales through e-marketplace platforms like Flipkart and Amazon starting September 29, 2019, via their respective shopping festivals, will also be at the pre-duty cut prices. While the online sales could be discounted, it is very likely that prospective TV buyers may postpone their purchases hoping that TV manufacturers will further reduce the prices.
Avneet Singh Marwah, CEO, Super Plastronics Pvt Ltd, the exclusive licensee of Thomson TVs in India, said the duty rate cut will boost buying sentiments and cut TV cost by 1% to 2% at least. However, on the time frame for implementing the price reduction, he said, "The rate cut will be implemented by mid-October."
According to TV industry executives, every manufacturer typically keeps an inventory of about two weeks at any given point. During festivals though it tends to be a longer inventory cycle of three weeks or more keeping in mind the high demand scenario in the market. So, products carrying the lower price tag will only be those manufactured using open cell TV panels that will clear customs post the duty
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