India Imposes 5% Basic Customs Duty on Open Cell Components

India will levy a 5% basic customs duty on imports of picture tubes used in making open cells – used in display screens of LED or LCD televisions – from November 12, 2020. The move will encourage foreign companies to set up display manufacturing units in India, industry insiders said.

The revenue department issued a notification to the effect on Wednesday, ‘on being satisfied that it is necessary in the public interest so to do.’

“Customs duty of 5% has been imposed on few items for manufacture of open cell for televisions like pure cell and printed circuit board for open cell which were earlier exempt from duties,” an official said.

The move follows a 5% basic customs duty on open cell television panel imports which was imposed from October 1 this year. The exemption 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.

Television makers had 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. They had also demanded that imports of parts of open cell should be levied with duties so as to create parity.

“The imposition of duty on the parts of open cell will give the domestic manufacturers a level field with the imports and incentivize the manufacture of these parts in India,” said Bipin Sapra, partner at EY.

Sunil Vachani, chairman of Dixon Technologies that makes LED and LCD televisions, said that the government has responded to industry’s demands for a level playing field.

“It’s a welcome step, it will encourage display fab manufacturing to come to India, in turn driving investments, and ensure that no unfair advantage is given to any player,” he said.

Government has given protection to local industry 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.

Source: ET