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Restrictions on import of colour TVs into India unlikely to impact prices significantly

July 31
23:29 2020

The curbs imposed on the import of colour televisions (TVs) into India are unlikely to significantly impact prices in the short run.

“Depends on the extent of local manufacturing. Some if it is being manufactured locally and some are being imported. So in the short run, there could be a slight price impact,” said Rajat Kathuria, Director and Chief Executive, Indian Council for Research on International Economic Relations (ICRIER).

On July 30, the government restricted import of colour TVs in a move that is being viewed as a move to boost domestic manufacturing and reduce inbound shipments of non-essential items from countries like China.

In FY20, TVs imported into India stood at $ 781 million. Of this, $ 428 million was from Vietnam and $ 293 million was from China. This includes a number of relatively unknown brands as well as known brands like Xiaomi’s Mi TV range, Samsung’s LED TVs and more.

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“Import policy of colour TVs…..is amended from free to restricted,” a notification from the Directorate General of Foreign Trade (DGFT) read. The curbs are imposed on TV sets of all screen sizes, ranging from up to 36 cm to over 105 cm. Liquid crystal display (LCD) television sets of screen size below 63 cm are also covered under the restrictions.

China is the largest exporter of TV sets in India, followed by countries like Vietnam, Malaysia, Hong Kong, Korea, Indonesia, Thailand, and Germany. In FY19, imports from Vietnam and China stood at $ 428 million and $ 293 million, respectively.

India’s television manufacturing market is divided majorly into two broad categories — premium TV brands, which include companies such as Sony, Samsung, Sony and LG. There are also brands like Xiaomi, Vu, TCL, Realme and Nokia, which focus on the more affordable price points. Then there are brands such as OnePlus, which try to play their part in both price segments. Sony, Samsung, LG and Xiaomi have been big players in the TV segment in India for a while now, with a sizeable portion of inventory.

This is the latest in a series of moves to cut down India’s import dependence, especially on China. On June 23, the government made it mandatory for sellers on the Government e-Marketplace (GeM) portal to clarify the country of origin of their goods when registering new products

The government had also announced an interim ban on 59 apps with Chinese links, including TikTok, ShareIt, UC Browser, CamScanner and WeChat, citing ’emergent threats’ to the country’s sovereignty and national security.

India also restricted countries, which it shares land borders with, from bidding for public procurements projects without prior approval from competent authorities – blocking Chinese companies from the fray.

“If China decides to restrict exports to India, then there could be a problem for us,” Biswajit Dhar, professor at Jawaharlal Nehru University’s Centre for Economic Studies and Planning, said.

In FY19, bilateral trade between China and India was worth $ 88 billion, with a trade deficit of $ 53.5 billion in China’s favour, the widest India has with any country.

China is one of India’s leading trade partners and constitutes 9 percent of India’s total exports and 18 percent of total merchandise imports.

Import dependency on China for a range of raw materials (active pharmaceutical ingredients, basic chemicals, agro-intermediates) and critical components (auto, durables, capital goods) is skewed.

Of the respective imports, 20 percent of auto components, 70 percent of electronic components, 45 percent of consumer durables, 70 percent of APIs and 40 percent of leather goods imported are from China.

“Our dependence on China is much higher than their dependence on us. We export mainly raw materials to then, which is the chief input of their value addition. We matter very little in their scheme of things. For China, any retaliation has to go beyond trade to make sense. Maybe they would retaliate politically,” Kathuria said.

 

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