Durables industry yet to reap benefits of Indo-Thai FTA
Financial Express, India
Durables industry yet to reap benefits of Indo-Thai FTA
By Mona Mehta
23 January 2006
MUMBAI, JAN 22: The free trade agreement (FTA) signed between India and Thailand in 2004, widely expected to bring down the prices of colour televisions and colour picture tubes imported from Thailand, is yet to have its desired effect. Although import tariffs have dropped from 15% in 2004 to 6.25% in September 2005, the effect has been nullified by increase in freight rates from 6-8% owing to rising fuel costs.
In 2003-04, imports of CTVs from Thailand comprised 15-20% of the Rs 20,000 crore consumer electronics segment. The industry is now pinning hopes on the import duties falling further to 0% levels by September 2006, when the FTA will be fully implemented.
When this happens, Japanese durables companies in India like Sony, Sharp, Hitachi and Panasonic which import from Thailand will be able to drop prices of CTVs by 6%, leading to intense price competition between Korean and Japanese brands in the Indian market, say industry observers. Sharp India (part of Sharp Corporation, Japan), which is importing over 30% of ‘Sharp’ products from Thailand is looking at cutting down prices of their products by 6.25%, in India in September 2006. Sharp India Ltd, vice president, Prasoon Banerjee said, “We will be able to sell our 21-inch ‘Sharp’ flat CTVs at an MRP of Rs 8,400, across the country by the year end.” Currently, ‘LG’, and, ‘Samsung’ 21-inch flat CTVs are priced at Rs 10,990. However, the Korean CE giant LG Electronics is not willing to give in so easily.
LG Electronics India national sales head, Amitabh Tiwari mentioned, “If Sharp 21-inch flat CTV will be available at Rs 8,400, even we will try and introduce low-end CTV models and match up with the price of Sharp. We may look at importing LG CTVs from Thailand where LG Thai is present.
However, the profits from imports via FTA will not be high as there is an expected drop in excise duty from 16% to 6%, very soon. With the move, we will be able to match up with the Sharp prices.”
Besides, LGEIL which has 28% market share in CTVs segment hopes to sell 32 lakh CTVs this year in India, this year.
