Industry & Economy
-
Air-conditioners & Refrigerators
Excise cut on ACs may not really soothe
Our Bureau
New Delhi
,
Feb. 28
IF you thought that purchasing a new air-conditioner was going to be easier on your pocket following an excise cut of 8 per cent on ACs announced in the Union Budget, think again.
There is unlikely to be much benefit for the end consumer, the reason being that currently over 75 per cent of the production of air-conditioners takes place in excise-free zones.
"The cut in excise duty is unlikely to impact most manufacturers as they are already producing in excise-free zones. However, the reduction in peak rate of customs duty from 20 per cent to 15 per cent may lead to a price reduction in high-end items such as split air-conditioners, plasma TVs or high-end washing machines," Mr Rajeev Karwal, Managing Director & Chief Executive Officer, Electrolux India, said.
Companies such as LG, Samsung and Electrolux source air-conditioners manufactured at excise-free locations such as Uttaranchal.
However, the prices of certain AC brands (such as Voltas, Carrier or Blue Star) that are manufactured at non-excise-free zones are likely to see a decline. "Factoring in the negative impact of decrease in abatement for ACs to 30 per cent from 35 per cent, the end prices of ACs should decrease by about 2-5 per cent," Mr K. J. Jawa, Vice-President - Operations, Voltas Ltd, said. This would roughly translate into a price decline of about Rs 500-Rs 900 per AC.
Mr B. A. Srinivasa, Director of the Chennai-based retail store Vivek, says the implementation of VAT is going to help prices stabilise and probably decrease.
He says the reduction in excise duty on air-conditioners should see basic (ex-factory) prices fall by Rs 1,000 onwards.
Industry officials, meanwhile, add that though there may be little impact on prices in the short-term, the next two months may see a price decline in consumer durables due to other indirect measures announced in the Budget. According to Mr Ajay Bajaj, Product Head (Air-Conditioners), LG Electronics, the reduction in customs duty on metals and a cut in the peak rate of customs duty should help manufacturers in saving on input costs, which subsequently could be passed on to the consumer.
Article
E-Mail
::
Comment
::
Syndication
::
Printer Friendly Page
|
