All Eyes On The Budget

With the Union Budget 2020 presentation round the corner, the industry is looking for a reduction in GST for ACs and TV sets above 32-inch to 18 percent and for 4-star and 5-star energy-efficient ACs and refrigerators to 12 percent; basic customs duty on open cells to remain at 0 percent, post September 2020, as they are not being manufactured in the country; reinstatement of reimbursement of R&D expenses to 200 percent; and incentivization of local manufacturing. The electronic component industry is seeking for the disability of 10–12 percent it faces in comparison with its international counterparts as China and Vietnam by direct investment subsidy, in line with the erstwhile MSIPS to be addressed, promotion of Electronic Manufacturing Clusters by state governments and a production subsidy of 6 percent of consignment value.

The Indian mobile phone manufacturing industry too is seeking reinstatement of the recent notification from the ministry of commerce and industry. The Merchandise Exports from India Scheme needs to be reversed. The recent reduction to 2 percent export incentive of the freight on board value of the product, needs to go back to 4 percent, failing which the industry will be compelled to refuse export orders, retrench employees on a large scale and reassess its investment plans in India. This is in stark contrast to the industry’s appeal for an 8 percent export incentive. A lowering of GST on entry-level mobile phones and support to local phone manufacturers is also being sought.

A back-of-the-envelope calculation reveals that the Indian TV unit sales declined by about 9 percent in 2019, albeit, the transition to large-screen premium models was flat by value. Within the industry, while the Japanese brands struggled, it is the Korean and Chinese brands which caught the attention of the consumer, with innovations and new offerings in price segments where there is massive consumption. Online sales gained popularity, and brands like Xiaomi, OnePlus, Blaupunkt, Motorola, Nokia, iFfalcon, and Thomson ventured into the smart television category, increasing the e-commerce contribution in this segment from 25 percent in 2018 to 30 percent in 2019.

The industry has largely been stagnant this year. All eyes are on the upcoming Budget to restore the growth momentum imperative for this sector.