"The 26-inch TV segment is not more than 8-10 per cent of the overall TV market. Whereas the 32 to 43-inch TV segment constitutes almost two-thirds of the overall TV market and is critical for most players,” says Rohit Kumar Singh, spokesperson, CEAMA.
“Most middle-income homes in India have TVs in the 32 to 43-inch bracket and significant number of launches and innovations happen in this segment," he says.
Grey market operators, Singh maintains, can take advantage of the current dual GST rate structure, since TVs above 68 cm continue to be taxed at 28 per cent.
While GST on smaller TVs is at 18 per cent in addition to the customs duty on most TV parts (for all screen sizes) in the 5-10 per cent bracket. "There is a clear pricing advantage, which could further fuel grey market imports," he says.
Some of the key components going into TV sets include open cells, display panels and plastic units, which are all imported. TV manufacturers argue that open cells for smaller TVs (up to 68 cm) are no longer available abroad, so importing and assembling it in the country is a disadvantage.
“What is the point then of slashing GST on TVs up to a screen size of 26 inches, when most of us don't even make it," says the chief executive of a top electronic goods maker, who declined to be quoted.
"It makes greater sense instead to slash GST on TVs that are actually assembled in the country and give local manufacturers a pricing advantage," he adds.
Refrigerator and washing machine manufacturers such as Godrej Appliances have already slashed GST on their products, following the government’s decision to reduce the GST rate by 10 per cent. Kamal Nandi, business head and executive vice-president, Godrej Appliances, said it had reduced prices (by 10 per cent) in microwave ovens and chest freezers, in addition to refrigerators and washing machines.
"The GST was slashed on all these categories. And since our portfolio includes these products, the GST benefit has been passed to consumers," he adds.