Centre seeks to enable cheaper large TVs in India, incentives for ACs too

Duties on open cells for television panels were slashed to 2.5% from 5% in 2023, in order to boost the local industry. Now, a new proposal by the ministry of electronics and information technology (Meity) plans to completely remove the import duty in order to boost sales of large-screen televisions in India. A public procurement programme of TVs with screen sizes of above 32 inches is also in works in a bid to boost the overall televisions industry, said three senior government officials with direct knowledge of the matter.

Meity has also proposed customs duties on plastic molding used in TVs, and reducing goods and services tax (GST) on local manufacturing of display panels to 18% from the current 28%.

For air conditioners, an extension of the production-linked incentives programme for white goods is expected to be rolled out until at least the end of this month, the officials cited above said, requesting anonymity.

The plans were illustrated and shared by the ministry of electronics and information technology (Meity) with multiple other ministries. The ministry of commerce, and ministry of finance are also expected to collaborate on the move—which is expected to culminate in establishing India as an export hub for televisions. This will further lead to an increase in domestic value addition in televisions to 45% from 28%.

“The idea is to establish India as a higher-value electronics industry, and not just be stuck at assemblies. To do this, Meity is actively considering localizing displays and display components manufacturing, which will play out through various initiatives in the coming years. This also involves plans to set-up pure-play display fabs in the country—Meity and the India Semiconductor Mission (ISM) are currently considering a few suitable such applications at the moment," one of the officials said.

Also read | Chip(per) ambitions: Why India needs its wafer fabs

Mint’s email to Meity seeking comment on the matter did not immediately receive a response, at the time of publishing.

The move to localize and incentivize TV display panels is crucial, since the display panel and open cells contribute to nearly 50% of the bill of materials (BoM) cost for televisions. Currently, open cells are imported from China, Taiwan, Vietnam, Thailand and Malaysia, leading to most of the revenue generated from television sales flowing out from India.

Industry analysts said that Meity’s initial push could be to expand the scope of the market, while gradually improving the local value addition prospect.

“Reducing the import duty on open cells will not increase value addition—instead, this can help reduce prices and further expand the domestic TVs market. This would be important too, because the market is a sizeable one across the country. At the same time, multiple contract manufacturers are already working on localizing assemblies of open cells in the country—locally manufacturing them still remains a long-term plan," said Tarun Pathak, research director at market researcher and consultant, Counterpoint India.

One of the officials cited above, as well as a senior industry consultant, further indicated that Noida-headquartered Dixon Technologies is currently in process of setting-up local assemblies of open cells for television panels. Sunil Vachani, chairman of Dixon Technologies, confirmed to Mint that the company is in process of setting-up localized assembling and manufacturing of open cells for television panels in India.

The domestic televisions market is estimated to be worth $6.5 billion as of last year, as per data sourced exclusively to Mint by Counterpoint India. The average price per TV sold in India, as of June this year, is $460 ( ₹38,500). Korean electronics majors Samsung and LG led the TV market as of the June quarter, with 16% and 13% market shares by volume, respectively. China-headquartered Xiaomi was a close third, selling 12% of all TVs in the country. Japan’s Sony, one of India’s oldest global electronics brands, was fourth with 8% of the market.

Also read | Dixon’s ramping up its mobile and IT hardware biz, but that may dilute margins

Over the past decade, Centre-driven initiatives have established a holistic local assembling programme for televisions as well as air conditioners. In the televisions industry, nearly all of the units sold in India are locally assembled. However, most core components, which take up the bulk of the bill of materials (BoM) cost of televisions are still imported—which leaves India’s contract manufacturers, such as Noida-based Dixon Technologies and Manesar-headquartered VVDN Technologies, with lesser intrinsic ‘value’ that they add to the electronics ecosystem.

This ‘value addition’ is key in order to ensure that a larger chunk of revenue generated from the sales of TVs and ACs in India stay within the country.

One of the officials cited above said that a concerted push to make India an export hub for televisions “would be made after the Centre establishes India as a domestic manufacturing hub."

Another official further added that Meity and ISM’s assessment of proposals for display fabs are “seeking to evaluate the sophistication of TV panel technologies."

“It is important to incentivize the right TV technologies, and not just any. This assessment may take some time, but is crucial for us to get right," he said.