India’s introduction of an import tax on flat-screen televisions has led to a 30 per cent decline in television sales in the UAE, electronics retailers say.
On August 26, the Indian government imposed a 36 per cent duty on TVs that airline passengers bring in an effort to stem capital outflows.
Before the tax’s imposition, passengers were allowed to carry televisions as wide as 39 inches into India without incurring any charges. That enabled many people to avoid paying duty on 40-inch screens.
It was worth the effort to bring them in by hand because televisions are substantially cheaper in the UAE.
“Even if you converted [the price] into Indian rupees, there was a gap of between 15 per cent to let’s say 18 or 20 per cent,” said Niranjan Gidwani, the deputy chief executive of Eros Group. “So some of them were carrying it for their personal use and some were carrying it to sell and cover some of their travel costs.”
The new customs duty has effectively stopped the “hand-carry” business in India, according to Mr Gidwani.
“On the TV side, we are down in quantity by about 30 per cent. In terms of value, the drop has not been that high because we are now shifting the customer focus to the higher-end premium models where the [profits] are much higher,” he said.
Eros Group, which recorded a 20 per cent growth in business in the first nine months of the year, estimates that the hand-carry television export business to India averaged between 25,000 and 30,000 sets a month in the 32-inch and 40-inch categories before the levy was imposed in August.
“The impact has been across the market,” said Nadeem Khanzadah, the head of retail at Jumbo Electronics.
“In the overall TV business there is about a 10 to 15 per cent impact. But within those categories, the 32[inch] and 40[inch], it is about 25 to 30 per cent.”
The biggest drawback, according to Mr Khanzadah, is that the duty imposed is not on the price paid in the UAE. Rather, the levy is based on recommended retail prices of televisions in India.
Jumbo, like Eros, is now concentrating on larger screen sizes to plug the shortfall in sales.
India is Dubai’s largest export market, accounting for goods worth more than Dh35 billion last year, according to Dubai Exports.
As many as 3.5 million of the 8 million new televisions in India each year are imported, according to estimates from the Consumer Electronics and Appliances Manufacturers Association.
Buyers from India flock to events such as Gitex Shopper, which is currently taking place at the Dubai World Trade Centre, to snap up bargains.