In India, TVs to Cost More; Mobile Handsets and Solar Equipment to Cost Less

By Indrajit Ghosh – Director, India and South Asia, DisplaySearch

The budget released by the Indian government on February 26 includes various measures affecting economic incentives. The mean excise duty on manufactured goods will be increased from 8% to 10%. This signaled the government’s intention to begin to roll back the stimulus package introduced in response to the global financial crisis in late 2008.

Along with increases in the cost of petroleum products (which will lead to higher costs for plastic and logistics), this will lead to an increase in the cost of TVs. Branded vendors that had been holding back price increases will now pass on the additional costs to customers. So prices of TVs in India are likely to increase, probably up to 4%.

The government also announced incentives for companies promoting renewable energy and energy efficiency. Equipment for photovoltaic and solar energy products will now be subject to a 5% import duty, down from 10%, and they will be exempted from excise duties that are levied on manufactured goods. Also, LED lighting will cost less, as excise duties will be reduced to 4% from 8%.

Mobile phone manufacturing in India will also get a boost, with reductions in duties and special packages for domestic manufacturers. These new measures should make mobile handsets made in India cheaper by 10%.

There are also incentives for innovating in India, as the establishment of innovation centers in India will be encouraged through fiscal incentives. This would make India an attractive destination for innovation. Look out for more Indian patents in the future.

Finally, the government reduced personal income taxes, which should boost private consumption; this could be expected to lead to more TV purchases, thus negating to some extent the expected price increases.

For the last 18 months, the Indian economy has survived on government spending; these changes anticipate the return of private spending to power the economy.