television receivers

The high cost of television receivers is mainly due to scale of production and cost of the input raw materials. The degree of automation and efficiency and technology are additional factors which determine the cost of components. In India, the input materials are subject to very high customers duties. Because of the split up of licences presumably with a view to avoiding a monopoly situation, the scale of operation are far lower in India than in countries overseas. Small volume of production has engendered the use of manual techniques of production which pushes up costs.

Though wages may be comparatively lower in India than in Western countries, the industry in India is plagued with lower productivity, labour unrest and power shortage. These factors push up the cost substantially. The electronic components industry, in general, and the picture tube industry, in particular, will need protection by way of import duties. The protection being given to the electronic components industry is in no way different from the treatment according to other engineering industry. It would be impossible to grow in India an indigenous electronic components industry without protection unless all inputs are available at international prices and unless production is is available in the Western markets at about US $90. The cost of components in a set would be of the order of US $60, including the cost of the picture tube. Balance of US $30 covers assembly, testing, marketing, financing and profit. In India, the build-up of the costs is as follows: Price of components including the picture tube (Rs. 1,285 + Rs. 80 towards freight and mortality) = Rs. 1,365,00; cost of manufacture and marketing including profit Rs. 235.00; Dealer’s commission is Rs. 200; Excise on Rs. 1,600 is Rs. 84; Sales Tax (10 percent ) is Rs. 184.40; total Rs. 2,072.40. This represents the cheaper model available today. In Western countries the cost of assembly, testing, financing and profit. Including dealer’s commission, amount to only US $30 or approximately Rs. 250. The cost of similar operation in India escalates to Rs. 435 in spite of the so-called cheap labour. A cost comparison of components available to the television industry in India as against what television manufacturers in Western countries are able to obtain is given in the Table below:

Notes: 1. Assumed US $ 1 =Rs.9.

2. Accessories like antenna and installation are extra and cost nearly Rs. 200 in India.

It will be seen that apart from the picture tube the other components are also expensive.

A mass produced plastic cabinet will be available in western countries to the TV receivers industry at about US $ 5 whereas a wooden cabinet produced in India costs as much as Rs. 125. There is a feeling that as the wooden cabinets are made by the small-scale industry, it would be advisable to stick to this approach. Cost reduction would be difficult with such approaches. Again, in the case of tuners and deflection components, the Indian price is nearly 3 to 4 times the price of similar components available overseas. Semi-conductors are also expensive. Therefore, it is stated that it would not be appropriate to single out the picture tube as the main culprit leading to the high cost of components for a television set. It would be necessary to look at the cost structure of the electronic components industry in general for the answer. It should be possible to product a moulded cabinet in India provided all the manufacturers join together as a consortium set up the necessary facilities or an MNC who has considerable experience in the field is asked to produce the cabinets for supply to the rest of the industry. If we stick to the wooden cabinet, it may protect the small-scale industry at the expense of the consumers. Unless the scales of operations for the other components increase and unless input raw materials are made available at international prices, it would be difficult for the electronic components industry to bring down the price to international level.

One may argue why a high cost electronic components industry should be supported in India, and take the view that it may be advisable to import the components. The suggestion may be valid when we are flush with foreign exchange. The situation was quite different a few years back. In any case, for the healthy growth of the electronics industry it is essential that the building bricks-electronic components – are made in the country. Industry’s attempt should be towards a policy which enables components to be made economically and it is essential that all steps are taken to look into the difficulties of the electronic components industry and remedy the same. The glass shell for the picture tube is being imported and the current c.i.f. price is about Rs. 80. An import duty of 75 percent pushes up the cost to Rs. 140. Taking damage in transit into account, the price per glass shell comes to Rs. 150. There is a freight element of Rs. 23 in the c.i.f. cost of Rs. 80. Duty is payable on freight and the element of freight cost plus duty amounts to Rs. 40 out of the total cost of Rs. 150.

1. How long can an industry sustain on protection?

2. What is the impact of incidental services like assembly, testing, marketing, etc. on the total cost?

3. Would you agree to the suggestion for a complete changeover to wooden cabinet?

4. Would it be desirable to import the components rather than make them in India?