PRE-BUDGET RECOMMENDATIONS 2012-2013
CEAMA
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Consumer Electronics and Appliances Manufacturers Association (CEAMA), an
all India organization in the Consumer Electronics and Durable sector, looking
after the common interest of the members, for sustainable growth in the sector.
Been in existence for last 32 years.
Presently, there are about 100 members.
The membership spectrum comprises of both Domestic Corporates & MNCs, and
includes large, medium and small-scale sectors. LG, Samsung, Videocon,
Panasonic, Philips, Haier, Godrej, Whirlpool, Onida, Sharp, TCL, Onkyo etc. are
our members.
INTRODUCTION
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Consumer Durables manufacturing sector plays an important role in the economy
of the Nation.
Contributes more than 5.5% to the Index of Industrial Production. It is an
employment intensive sector.
For every one direct job that is created in this space, about three indirect jobs are
created.
This sector has been the engine of economic growth for Japan post Second World
War, then Korea in 1980s, 1990s and now China & South-East Asian Countries in
the 21st Century.
Considering the low penetration level of the Consumer Electronics and Home
Appliances in the country, this sector has immense growth potential.
REDUCTION OF CUSTOMS DUTY ON PANELS FOR LCD & LED TVS
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It is expected that by next year almost 6 million LCD & LED TVs will be sold in
the country and a major portion of this demand will be met through imports rather
than local manufacturing.
The reason for this is that there is zero duty on finished product of LCD & LED
TV under the Free Trade Agreement with Thailand, whereas, the LCD panel
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which is the most important part of the LCD TV is imported at 5% basic customs
duty.
This is an incidence of inverted duty structure and to remedy the situation, the
customs duty on inputs (LCD Panels) should not be more than that on the finished
product (LCD TV).
It is suggested that the Customs Duty on Panels for LCD & LED TVs should be
brought down to 0%.
This will give a boost to the Manufacturing of the LCD & LED TVs in India. It
will also create a level playing field for all the Manufacturers for domestic
market. It may create an opportunity for Export of TVs from India.
IMPORT DUTY ON SET TOP BOX
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The recent ordinance on digitalization of TV will create huge demand for Set Top
Boxes in the country and it is likely to touch 20 million pcs per annum.
Most of the demand is likely to be met from imports as Indian manufacturers are
facing huge disability factors.
The disability factor for Indian manufacturer is in the form of 12.5% VAT which
is paid by Indian manufacturers as cable and DTH operators do not provide ‘C’
Form since they are leasing out boxes. Cable and DTH operator do not pay any
VAT when they import from China.
We strongly suggest that the Customs Duty on Set Top Boxes should be
increased to 10% from the present level of duty of 5% to encourage local
manufacturing and create huge employment opportunities.
SAD (SPECIAL ADDITIONAL DUTY) LEVIABLE ON IMPORTS TO BE
ABOLISHED
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Manufacturers who are selling post imports items has to undergo cumbersome
refund process for getting back Special Additional Duty (SAD) allowed vide
Notfn. No. 102/97.
The process of claiming refunds from customs is time consuming and take appx. 9
to 12 months for recovery.
It is suggested that SAD levy should be removed both for trading and
manufacturing items, as it does not generate revenue for the Govt.
For Traders, SAD is exempted and for manufacturers CENVAT Credit available.
More over this is adding to the transaction cost of Companies.
Removal of SAD will not only result in cost saving for the Industry but also for
the Government.
This matter needs an URGENT resolution as the cash flows across the Industry
are under pressure.
R&D IMPORTS-CUSTOMS DUTY REDUCTION FROM 5% TO 0%
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Currently R&D units registered with the MOS can avail reduced Customs Duty of
5% + 3% Cess, on complying conditions laid down in Notfn. No. 51/96.
We recommend that the Customs Duty for R&D items should be reduced to 0% to
promote R&D in India, especially for Air-conditioning & Refrigeration and
Electronics Industry, which has got big potential.
This will invite more R&D set up in India in addition to technological
advancement and more innovative Indian products.
CUSTOMS DUTY REDUCTION ON IMPORT OF MAGNETRON FOR
MANUFACTURE OF MICROWAVE
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In the Budget 2010-11, the Customs Duty on Magnetron has been reduced to 5%,
under IGCR condition.
Under this condition, the manufacturer who imports goods and then get it made
through OEMs are not able to claim benefit of duty under IGCR and are liable to
pay 10% Basic Customs Duty.
As Magnetron is one of the most costly parts of Microwave, it is recommended
that Customs duty on Magnetron should be reduced to 0%, without IGCR
condition.
This will result in competitive pricing of Microwaves.
TRADE FACILITATIONS FOR IMPORTS AND EXPORTS
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Fund Allocation for Sea port development at Nhava Sheva, Pipav, Mundra,
Chennai
Advance Customs Clearance process for Imports and Exports to fasten the
customs clearance process and free flow of trade.
Customs Compliance to be shifted from current mode to Self compliance mode
with stringent violations norms.
24 hr Customs clearance of Import and Exports, at all important ports in India.
Faster Litigation Settlements through Fast track customs settlement commissions.
Reduction in Airfreight percentage for calculation of Customs duty, currently it is
20% of FOB value, should be reduced to 6%.
Online Customs Assistance to Trade on Import, Export, Duty Rate, Classification
etc.
INCREASE IN THE ABATEMENT RATE FOR MRP BASED EXCISE DUTY
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The products manufactured by our members are removed from the factory on the
basis of MRP based Excise Duty in terms of provisions laid under Section 4A of
Central Excise Act, 1944.
The current level of the Abatement is as under:-
Sr. No. Description of Goods
Abatement under Central Excise
1.
Monitor
20%
2.
Air Conditioner
25%
3.
LCD Television
30%
4.
Plasma Television
30%
5.
GSM Mobile Phones
35%
6.
Refrigerator
35%
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The MRP based Excise Duty has actually increased the overall incidence of
Excise Duty on the products related to Home Appliances sold in the aftermarket.
According to cost calculations the overall Excise burden has increased due to
MRP Based Excise Assessment.
This is due to the fact that the abatement rate is not adequate to cover all the taxes
and distribution margins involved in the long Home Appliances supply chain.
However, if the Government decides to continue the levy in the present form, then
the abatement has to be raised to the level of 45%.
Since the discount to be passed on to buyers is very high, the manufacturers of
Home Appliances products are forced to bear the duty incidence on account of
stiff competition.
To save the Home Appliances manufacturers from significant losses, it is
suggested that the MRP based assessment for Home Appliance products should
be increased to at least 45% from the current level.
REDUCTION OF CST RATE
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CST rate was meant to reduce each year in order to pave way for GST. However,
for the last 3 years, the rate of CST has been constant at 2%.
Since, CST is not creditable; it is a cost for manufacturers leading to increase in
prices.
It is strongly recommended that the CST rate should be reduced from 2% to 1%.
It is also suggested that the CST Rate without Statutory form should be fixed at
lower from highest to the average i.e. 10% for registered dealers.
CONCLUSION
If our recommendations are accepted, it will result in growth of demand in our sector.
Manufacturing will get a boost and will generate more revenue for both Union as well as
State Governments.