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Wednesday, Sep 07, 2005
Online edition of India's National Newspaper Wednesday, Sep 07, 2005 |
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Chennai
Special Correspondent
INDUSTRY-TRADE RELATIONS: State Information Technology Secretary, C.Chandramouli receiving a memento from Anoop Kumar, vice-president, CETMA, at the seminar on `Industry -Trade relations' in Chennai on Tuesday. The Chairman and Managing Director, Mi rc Electronics, Gulu Mirchandani (sitting), looks on.
CHENNAI: : The Consumer Electronics and TV Manufacturers Association (CETMA) on Tuesday said that the Free Trade Agreements (FTAs) India had signed with some countries were threatening the survival of the consumer electronics manufacturing base in the country. Now it is more profitable to import and sell than manufacture. Sony closed its manufacturing unit here after the FTA was inked with Thailand. It is now importing its range of products from its Thailand factory, the association lamented.
Skewed situation
The association said the FTAs had created a skewed situation. Portable TVs, DVDs, microwave ovens and split air-conditioners are already being imported. "When the duty [because of clauses in the FTA] goes down to zero per cent next September, you will find 20-21 inch TVs being imported because the handicap of making it here versus importing is seven per cent. So on the one side, there is the Commerce Ministry which is gung-ho on FTAs, and on [the other] side, there is the Finance Ministry, which has to adjust its balances and get revenues," remarked Gulu Mirchandani, Chairman and Managing Director, Mirc Electronics. The CETMA office-bearers said they were happy that Union Finance Minister P. Chidambaram had decided to revisit the duty on automobiles. "... I think we will request him to stop at our industry also so that he can revisit duties, especially excise duties," said K.S. Raman, former president, CETMA, and Managing Director, Sundarsons Electronics. The CETMA said excise duty on TV and other such goods was 16 per cent and value added tax, 12.5 per cent. But the VAT on IT products, most of them imported, was just four per cent. Companies such as LG, Onida, Videocon and Electrolux, had manufacturing bases in rural areas and created jobs. Except in Uttar Pradesh and Himachal Pradesh, there were no excise benefits. "It is for the Government to decide whether it wants to dole out money for rural employment or create wealth. Creation of rural employment can only happen when there is production here, when there is creation of wealth here," Mr. Raman said.
Low margins
On dealers' complaint of low margins, Mr. Raman said manufacturers too faced the problem. "We also operate on wafer-thin margins. The traders also operate on wafer-thin margins... In our industry, we have the tendency to give huge discounts... This is a volume game. Because we are looking at high volumes affordability becomes a big criterion. So we try to reduce price by innovating cost-effective methods... One or two companies have started the concept of Market Operating Prices," he said. This was an attempt to ensure margins (a minimum of 3.5 per cent) and, at the same time, remain competitive.
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