The Union Budget proposal for 2004-05 has failed to impress the consumer electronics industry, which was looking forward to fiscal sops to stay competitive in the post free trade agreements (FTA) regime.
"The industry is disappointed with the Budget. There is nothing that will help promote investments and growth in this sector," according to the Consumer Electronics and TV Manufacturers Association (CETMA).
This sector contributes 40 per cent to the electronic hardware manufacturing and this Budget has totally overlooked this sector. Though the Finance Minister, Mr P. Chidambaram, has reduced the customs duty on basic raw materials such as copper to 15 per cent, the major raw material for the industry is plastics, which continues to be at a peak rate of duty at 20 per cent.
Further, the excise duty on black and white TV, which has been facing negative growth for the last four years, has been increased from 8 per cent to 16 per cent, thereby, increasing the price of the sets by Rs 125, they pointed out.
According to Mr V.N. Masaldan, Managing Director, Hotline Teletube & Components Ltd, "This is a retrograde step. Besides, the black and white TV sets are not manufactured in the SSI sector to enjoy the exemptions."
From a manufacturer's perspective, Mr K.R. Kim, Managing Director LG Electronics India Pvt Ltd, felt that the positive initiatives of the Budget proposal has been the implementation of the value-added tax, which will lead to an integration of the markets and in the long run help in streamlining operations. The removal of the tax anomaly with the merger of service tax and excise duties is also beneficial in reducing the service expenses on manufacturers, he said.