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TVs get a 'Make in India' twist, start local production at component stage.


Date: 10-09-2018
Subject: TVs get a 'Make in India' twist, start local production at component stage
KOLKATA: Make in India just got a shot in the arm from electronics manufacturing. In the past few weeks, brands such as Xiaomi, TCL, Skyworth, BPL and Thomson — which until recently were importing televisions for sale in the country — have started local production at the component stage, three senior industry executives said. 

Even top brands like Sony and LG are now expanding production of televisions in India at the parts stage — as opposed to just assembling imported modules — after the government changed the duty structure earlier this year to make local manufacturing cheaper by 5-7%. The shift includes premium OLED and 4K models that cost a few lakh rupees. The companies are now locally assembling the TV panel itself as well as manufacturing printed circuit boards (PCB) and moulds. 

While most of the manufacturing is by contract companies, LG is expanding its Pune factory and TCL has plans to set up an industrial park to manufacture components. 

As per industry estimates, around 35% of the 14 million TV sets sold in India annually are imported, which the industry expects will come down by half by this Diwali when the Make in India models hit the market. 

Apart from Sony, all online exclusive brands used to largely import sets. 

The government increased import duty on television sets to 20% from 10%, which made imports from China, Thailand and Malaysia unviable. 

The duty on components was also changed to promote backward integration. The government imposed 15% duty on ready-to-use LED TV panels, while 10% duty was initially levied on open cell TV panels, subsequently reduced to 5%. Open cell TV panels involve manufacturing at the component stage since the TV panel requires further production processes before becoming ready for final assembly. 

“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,” said leading contract manufacturer Dixon Technologies’ chairman Sunil Vachani. 

China’s TCL Corp, the third-largest TV maker globally, has started India production with two contract manufacturers for both the TCL and iFFALCON brands with a capacity for 100,000-150,000 units a month. 

TCL India’s country head Mike Chen said the company has plans to set up its own manufacturing plant, open cell panel factory and R&D. 

BPL’s COO Manmohan Ganesh said local production has just started for 32 and 40-inch sets, which account for more than half the overall market. It will expand to include larger screens and smart TVs. 

An industry executive said while LG has started open cell TV manufacturing at its Pune plant of 32 and 40-inch units, it is set to do so for larger screen models as well. 

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. 

Xiaomi India too has started local production of 32 and 43-inch models in India through the open cell process and plans to completely localise production by the end of this fiscal, an executive said. 

However, the industry is concerned that the government may need to bring down import duties on open cell panels to zero percent to compete against imports from some countries with which India has free trade agreements (FTAs), which mean nil duty if there is any value addition. 

Market leader Samsung is contemplating the reduction of local manufacturing and instead importing TVs from Vietnam, with which India has an FTA, at least when it comes to largescreen models. However, a company spokesperson said Samsung is deeply committed to India and no decision has been taken so far. 

Avneet Singh Marwah, CEO at Super Plastronics, the licensee for Thomson and Kodak TV brands, said zero duties should be retained for open cell panels since there is no domestic manufacturer that needs protection and to further promote local production against FTA imports. 

Source: economictimes.indiatimes.com

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