Ban on duty-free TVs to hurt sales at airports

Ban on duty-free TVs to hurt sales at airports

The ban on duty-free import of high-end, flat screen plasma television sets from August 26, 2013 is bound to hit sale of such TV sets at duty free (DF) shops at Indian airports also.

According to the partner at consulting firm BMR Advisors, Mahesh Jaising, the notification applies to DF shops at airports. “Duty Free shops in India are located outside the customs frontiers and procurements from duty free shops (purchases at DF shops) are also counted towards baggage allowance. Hence, the above restriction equally apply to TVs sold through duty free shops in India as well.”

A source at Nuance Group (India), which runs duty free shops at Bangalore International Airport (BIA) said that the sale of such TV sets is close to 100 units a month at DF shops at BIA.

The ban, notified by the government recently, is aimed at curbing the runaway current account deficit, as the concession to Indian travellers is perceived as non-essential import. The ban came in by way of inclusion of such TV sets in Annexure I of Baggage (Amendment) Rules, 2006 (Baggage Rule, 1998). These TV sets will now attract a levy of 36.05 per cent, comprising duty of 35 per cent and education cess thereon. They are generally imported from Singapore, Thailand or Dubai to take advantage of the price differential.

The move has also been seen as a fillip to domestic electronics manufacturing, as said by the president of the Consumer Electronics & Appliances Manufacturers Association, Anirudh Dhoot few days back. “Our estimate is that there is a demand for about 8 million flat panel TV sets. But 3 to 3.5 million sets are typically imported every year, mostly through either free baggage allowances or concessional rate of duties under the free trade agreements with various countries. Thus, some 40 per cent of the demand was being met through imports,” he had said.

TV makers hope new levy on panel imports will boost sales

With the imposition of 36 per cent duty on imported TVs as baggage becoming effective from today, manufacturers, including Panasonic, Sony and Samsung, are hoping that their local sales in India will grow in double digits.

"This will result in expanding profit margins and will lead to better profitability," Panasonic India Managing Director Manish Sharma to PTI.

The jump in terms of volume for the industry in India will be approximately 1.5-2 million units and the value would be around Rs 400 crore approximately, he added.
Expressing similar views, another Japanese manufacturer, Sony said the local consumption will increase, although the total market size would remain the same.

"The total market definitely remains the same... at least 10-15 per cent panels used to come through this route. This would be naturally now converted in the local consumption," said Sony India Sales Head Sunil Nayyar.

According to the South Korean manufacturer Samsung, the levy was a "relief for the industry" and would boost the local demand.

"This enhanced local demand should boost domestic manufacturing through better capacity utilisation, enhance local employment as well as lead to better tax collections," Samsung India Deputy Managing Director R Zutshi said.

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