Manufacturing Current Affairs - 2019

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Govt scraps import duty on open cell TV panel used to make TV sets

In a bid to boost domestic manufacturing, the Central government has removed 5% custom duty that was imposed on import of open cell TV panel. Open cell TV panel are used in manufacturing of television sets such as LED TVs.

Key Highlights

As per the notification issued by Union Ministry of Finance in this regard the open cell, (15.6 inch and above), for use in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panel would attract zero duty.

The government has also scrapped custom duty on import of Printed Circuit Board Assembly (PCBA), Cell (glass board or substrate) and Chip on Film, which are used to manufacture open cell TV panels.

Open cell panel is an important part of TV manufacturing and covers 60-70% cost of the unit. The move to scraps import duty on open cell TV panel would also help to reduce the price of TV panel by around 3% as it would lower the input costs for TV makers.

Background

On 30 June 2017, the government had imposed a custom duty of 5% on import of such panel. Many TV makers including Consumer Electronics and Appliances Manufacturers Association (CEAMA) had opposed the increased duty, and have been complaining about a slump in demand and had requested government to waive it. TV makers have since then been complaining about a slump in demand.

Currently, open cells panels are not manufactured in India and TV companies rely on imports of these key components part of LED television sets. An import duty levied by government on open cell LED panels had also pushed some electronics makers to import TV sets from neighbouring markets like Vietnam and Thailand to avoid duties on open cell panels.

PMI Reports Manufacturing Growth at Six Month Low

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) make the following observations:

  • Amid slender increases in new orders and production, manufacturing activities slowed down to a six-month low in March, reflecting a loss of growth momentum.
  • The PMI slipped from 54.3 in February to 52.6 in March. The PMI score at 52.6 was a six-month low and it highlights a loss of growth momentum.
  • Even though the operating conditions in the Indian manufacturing industry are improving, there was has been a widespread slowdown in growth.
  • Factory orders and production expanded at the slowest pace since September last while job creation eased in March.
  • Softer increases were registered in new orders, production, input buying and employment. The deceleration was accompanied by subdued inflationary pressures, with rates of increase in input costs and output charges below their respective long-run averages.
  • Manufacturing sector expansion in India retreated in March, with metrics for factory orders, production, exports, input buying and employment all decreasing.

The report ahead of the RBI’s first monetary policy for the ongoing fiscal year to be announced on April 4 makes a strong case for the rate cut. The index is based on data collated from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies.