Budget 2022 Expectations: Rationalization of tax rates for TV sets will help stimulate demand

As India's economy continues to recover from COVID-19, a strong stimulus in manufacturing via the Union Budget 2022 is necessary. Though the Government remains committed to implementing long-overdue changes making India 'Atmanirbhar' by actively supporting Make in India projects; reforms that boost spending and improve consumer demand are expected in the upcoming Budget.

One of the critical measures for the consumer durables industry is the rationalization of Tax rates on TV sets, as they are no longer regarded as luxury items. Lowering the tax slab to 18% from 28% will assist in balancing pricing pressure and stimulating demand, ultimately increasing customer affordability. Reducing the Tax slabs for eco-friendly and energy-efficient products in TVs will boost demand and improve consumer adoption of sustainable appliances. It will aid in penetrating deeper into the market. Additionally, the Budget should offer incentives for manufacturers to manufacture energy-efficient products, which will be in line with the Government's sustainability agenda. 

The upcoming Budget should consider retrieving customs duty on panels as there is too much price fluctuation. Last year, we experienced a 300 percent spike in the cost of Open Cell TV panels, which impacted business sustainability and made product price increases necessary. Given that India has yet to develop a comprehensive infrastructure, including display fabs for open-cell production and the economic recovery from the pandemic, lowering customs duty and GST rates on electronic components and rationalizing slabs for various product categories is required. This move could help the manufacturers expand production and thereby re-work the product prices, boosting demand and consumption. 

For the Manufacturers, the corporate tax reduction and the introduction of several PLI schemes in the Union Budget 2021 have heightened domestic manufacturing and elevated India as the global manufacturing champion. However, now for 2022, the manufacturing Industry needs support through Tax reforms & simplified legal procedures to recover from the pandemic-induced economic shock.  

The industry needs government support for the expansion of distribution & supply chains. By spending on infrastructure, the Government shall build the 'ease of doing business' & put India on the global competitive stage. A dedicated Freight Corridor will be a game-changer for the supply chain of manufacturing & also control costs for the sector. I urge the Government to consider the 'One Nation, One Permit, One Tax' system for a seamless and efficient road transport experience. Overall boost domestic manufacturing and introduce policies that will allow global companies to most essentially invest and manufacture in India.  

From a consumer standpoint, boosting the Section 80C deduction to Rs. 3 Lakh from the present levels of Rs. 1.5Lakh will assist decrease the tax burden, allowing individuals greater purchasing power. We are hopeful about the upcoming Union Budget and anticipate that it will include a well–balanced mix of reforms and regulations, which will support the ACE sector and contribute positively to India's economic narrative. 

By implementing balanced efforts through the Budget, the Government can act as an enabler and accelerator for the industry, rewiring them for the future.

Arjun Bajaj

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Arjun Bajaaj is chief executive officer and founder of Daiwa Televisions. He’s also the director of Videotex International Private Limited.