Rohan is planning to buy a new TV after two months. When he told his friend Prashant about this intention, Prashant advised him to buy the TV now, otherwise it will become expensive after two months. When Rohan asked Prashant about the reason behind it, Prashant explained that the cost of the open-cell panel used in TVs has increased by 15 to 17 percent. This increase in prices is due to consolidation among 4 to 5 panel manufacturers in China. As a result, several television brands have also started raising their prices. Prashant mentioned that this increase in prices will also affect the overall cost of the TV because the open-cell panel contributes to 60 to 65 percent of the total cost. Similarly, there are possibilities of price hikes for smartphones and laptops as well.
Referring to a media report, Prashant explained that Dixon Technologies has passed on the burden of increased panel prices to customers because the company itself does not manufacture TVs, but gets them produced on a contract basis. Super Plastronics, the licensee company for the Kodak brand, is also raising TV prices by 10 percent from June.
Rohan started worrying about his budget. He told Prashant that if the prices have already started rising, then there is no point in waiting for two months. Prashant informed him that retailers currently have a stock of 30 to 60 days, so he might be able to get a TV a cheaper price.
Prashant also told Rohan that this price impact will also be seen in mobile phones and laptops because they also use open-cell panels. However, it might not directly burden the customers as high-end phones and laptops have profit margins for companies to balance the cost.
Now Rohan asked Prashant if there is no solution available with the government to prevent price hikes. Prashant mentioned that the government can try to mitigate the increased cost to some extent by reducing the import duty on components of smartphones and TVs. During this year’s budget presentation, the government had announced a reduction in the basic import duty on certain parts of TV panels from 5 percent to 2.5 percent. If the government makes such decisions again, it could provide some relief.
Now Rohan understood the whole situation and said that he will accompany Prashant to the showroom tomorrow and buy the TV.
Download Money9 App for the latest updates on Personal Finance.