Colour TV prices may drop 5 to 10 per cent following cuts in the import duty on two crucial components in the Budget.

The government is expected to reduce import duties on colour picture tubes from 30 to 20 per cent and on glass parts from 25 to 20 per cent. Prices could fall further if excise duties are rationalised.

The government is reportedly considering these cuts following lobbying by the Consumer Electronics and TV Manufacturers Association.

The cuts, however, fall short of TV manufacturers' demand for reducing import duties on components to 10 per cent, as recommended by the Kelkar committee on indirect taxes.

Finance ministry sources explained that import duty will be reduced to 20 per cent this year keeping the domestic CPT industry's growth in mind. It will be cut further in subsequent years, they said.

CPTs alone account for roughly half the cost of a TV. Domestic manufacturers have often been accused of taking advantage of import duty protection to adopt predatory pricing tactics.

The domestic CPT industry is driven by four players -- Samtel, Hotline, JCT Electronics and BPL Display Devices. At least one manufacturer indicated today that he may cut prices if imports are relaxed.

Cetma has argued that a cut in CPT costs will stoke volume growth in the colour TV market. The market is expected to grow 19 per cent this year compared with 5 per cent last year.

Said Suresh Khanna of Cetma, "In 1985, China produced twice as many colour TVs as India. In 2001, the differential was six times. That is precisely why, despite continuous reduction in costs, colour TV prices in India are still higher than in other global markets."

Currently, CPT imports are insignificant, but are expected to grow in tandem with the growth in the flat-screen TV market. At least three domestic CPT manufacturers are ready to roll out 21-inch super-flat screens by the middle of the year.

These are expected to be roughly Rs 400 cheaper than Chinese imports. "A cut in duties will create some pressure on domestic manufacturers but we are ready to face competition," said Hotline chairman Anil Gupta.