New Delhi; July 8, 2009 - The Budget proposal to halve Customs duty on LCD panels to 5% will not benefit most LCD TV buyers since the top three brands are 
unlikely to make any significant price cut immediately. The Customs duty cut on this key input for flat-panel TVs would be applicable only on import of panels that are assembled into LCD TVs here.

Some players, such as Sony, which accounts for about a quarter of the LCD TV market, do not assemble these sets here and import completely-built units (CBUs). These brands will not benefit from the duty cut and, as a result, may not cut prices.

Other big brands such as Samsung and LG assemble LCD TVs here but even they are not cutting prices immediately. For instance, Samsung is running a month-long consumer promotion for LCD TVs that includes a freebie since July 1. The company is likely to continue with the promotion and retain its pricing this month.

LG had actually hiked LCD TV prices 3-8% from July 1. "LCD panel prices had moved up globally, forcing us to raise TV prices and are not in a position to roll it back immediately," said Amitabh Tiwari, business group head for home entertainment at LG Electronics. He claimed that the hike in panel prices is much more than the cut in customs duty and firms would be compensated only partially.

So in effect, a consumer would end up paying the same price she would have shelled out a month ago to buy the same LCD TV and for some brands much more.

The impact on prices of these high priced TVs would be clear only from August-September when dealers start giving discounts to attract consumers around the festival period.

"If players such as Samsung cut prices from next month, other brands such as Sony may be forced to either relook at local assembly of LCD TVs or sacrifice margins by bringing down prices to compete with the likes of LG, Samsung and Videocon," said an industry insider.

Another senior industry executive with an consumer electronics firm said that one of the reasons why companies are not cutting prices immediately is that there is a lot of inventory with dealers billed at a higher cost: "Consumer offtake has slowed down considerably over the last two days as people are expecting a price cut which has not happened yet. Companies would first like to clear inventory pipeline at the dealers and distributors level before announcing price cut."