Import duty hands Samsung a windfall

Korean firm stands to benefit from recent clampdown on duty-free import of flat panel TVs.

Last Updated: Sep 17, 2013, 11:31 AM IST

Samsung seems to be smiling all the way to the bank due to the government’s recent clampdown on duty-free import of flat panel television sets by air travellers.

“People were bringing in the top three brands, but this (imposition of duty) will have a good impact on our sales as a majority belong to our brand that comes in,” said Amit Malik, director, consumer electronics, Samsung India Electronics.

The government has imposed a 35% import duty on LCD, LED and plasma TV sets being brought into the country as part of free baggage allowance with effect from August 26. Considering a 3% education cess, the effective duty worked out to 36.05%. A back-of-the-envelope calculation suggests that this would bring to halt an annual import of about 10 lakh TV sets to India and would surely translate into big gains for Samsung India as more than half of that are Samsung products.

Such imports in the form of baggage by air travellers have reportedly dropped by as much as 75% ever since the imposition of duty. “Our estimate is that about 10 lakh sets were coming in yearly to India via this route, considering the number of international flights in our airports. This is a big volume. Of this, Samsung’s share was about 5-7 lakhs as per rough estimates.

We are confident that this is being translated into domestic sales,” he added.

To get you some perspective, about 1 crore TV sets were sold in 2012 in India, half of which were of flat panels. The imposition of tax incidentally coincides with the festive season, Malik pointed out.

To make the most of it, Samsung has readied two ultra-high definition TVs in 65- and 55-inch screen sizes priced at Rs4.35 lakh and Rs3.24 lakh, respectively.

Clocking a turnover of Rs24,000 crore last year, Samsung is targeting a 35% growth clip this year, and even the rupee depreciation doesn’t seem to be a spoilsport. “We have increased our prices by 2-3% this month for TVs and appliances as well mainly due to the currency fluctuations,” Malik said.

DNA / Sumit Moitra