Boost for Make in India! Sony, Xiaomi, LG begin production of TV components
Brands such as Xiaomi, TCL, Skyworth, BPL and Thomson have all started local production at the component stage in the past few weeks, which is a major fillip to PM Narendra Modi's Make in India initiative
Back in March, the government had halved customs duty on 'open cell' panels, accounting for close to 70% of the cost of assembling LED TV sets, to 5%. Before that the customs duty on imported LCD and LED TV panels and import duty on TV sets had both been doubled. All these moves intended to boost domestic manufacturing are already paying off.
According to The Economic Times, brands such as Xiaomi, TCL, Skyworth, BPL and Thomson have all started local production at the component stage in the past few weeks. This gives Prime Minister Narendra Modi's Make in India initiative a major fillip since till recently these brands were importing television sets for sale in the country.
Meanwhile, bigger players in the electronics space have scaled up their local production after the government changed the duty structure. After all, while the import duty on open cell TV panels, which involve manufacturing at the component stage, stood at a mere 5%, imported LED TV panels cost three times as much. The duty on import of completely built television sets is 20%, making imports from China, Thailand and Malaysia unviable.
"What triggered this wave of local production were these changes in duty structure which made it a definite advantage than importing. Brands can easily save up to 7% in manufacturing cost by locally manufacturing," leading contract manufacturer Dixon Technologies' chairman Sunil Vachani told the daily.
Hence, companies like Sony and LG are now locally assembling the TV panel as well as manufacturing printed circuit boards (PCB) and mould - as opposed to just assembling imported modules. The shift includes premium OLED and 4K models that currently cost a few lakh rupees.
Sony India's MD Sunil Nayyar confirmed the company is soon going to start similar manufacturing at the Foxconn plant where it already assembles television sets apart from increasing overall local manufacturing.
Not to be outdone, LG is expanding its Pune factory. Citing an industry executive, the report added that while LG has started open cell TV manufacturing at its Pune plant for 32 and 40-inch units - which account for more than half the overall market - it is set to do so for larger screen models as well. The demand for the latter is certainly seeing an uptick. According to the LG India spokesperson, more than 99% of its TV production is in India, including the technologically advanced OLED and UHD models.
TCL Corp, the third-largest TV maker globally, meanwhile has plans to set up its own manufacturing plant, open cell panel factory and R&D centre in India. In fact, the Chinese company has already started India production with two contract manufacturers for both the TCL and iFFALCON brands, with a capacity for 1,00,000-1,50,000 units a month.
A Xiaomi India executive told the daily that the company, too, has started local production of the 32- and 43-inch models in India through the open cell process and plans to completely localise production by the end of this fiscal.
All these plans afoot are expected to drastically cut down imports of TV sets. As per industry estimates, around 35% of the 14 million TV sets sold in India annually - or some 49 lakh units - are currently imported but the industry expects the figure to halve by this Diwali, when the Make in India models hit the market. That will also give a huge boost to employment generation, since assembling about 1 million television sets a year reportedly creates 600-700 jobs.
But domestic manufacturing continues to be threatened by imports from some countries with whom India has signed free trade agreements, like the arrangement with the Association of South East Asian Nations (ASEAN). Stakeholders feel that the government may need to do away with import duties on open cell panels entirely to help India take on cheap imports from countries such as Thailand, Indonesia, Malaysia, etc.
For instance, market leader Samsung is reportedly contemplating reducing local manufacturing in India and switching to importing TVs from Vietnam, with which India has an FTA, at least for the large-screen models. However, a company spokesperson told the daily that Samsung is deeply committed to India and no decision has been taken so far.
In any case, there's plenty of good news in the offing for consumers this festive season.
With PTI inputs