The Hindu Business Line : Consumer durables growth to surpass 12%: FICCI

Irregularities
The Govt charges 16% excise duty on televisions, whereas it is 12% for PCs.
Similarly, televisions attract a 12.5% VAT rate, while it is 4% for PCs

Our Bureau

New Delhi, Dec. 25 The consumer durables sector is set to surpass the 12 per cent growth rate during the current financial year.

This growth has been achieved despite the constraints of an inverted customs duty structure and high levels of excise duties on the main growth drivers of white goods and consumer electronics industry, a Federation of Indian Chambers of Commerce and Industry survey said.

The survey on growth projection for the consumer durables industry reveals that this sector is poised for a quantum leap due to technological improvements, falling prices due to competition, aggressive and innovative marketing and declining import tariffs.

The survey highlights that the market for non-IT consumer durable goods estimated at Rs 35,000 crore in 2006-07 with 11.5 per cent growth against 8.5 per cent growth last year is expected to achieve about 12 per cent overall growth in 2007-08

Growth rates

The sectors that are projected to achieve ‘excellent’ growth rates of more than 20 per cent in terms of quantity produced are: air-conditioners (25 per cent), split air-conditioners (60 per cent), frost-free refrigerators (54 per cent), washing machines (20 per cent), fully automatic washing machines (35 per cent), microwave ovens (35 per cent), high-end flat panel TV (100 per cent), LCD TV (110 per cent), plasma TV (100 per cent) VCD/MP3 (20 per cent), DVDs (25 per cent), DVDs-organised (25 per cent).

There is a need to remove some anomalies affecting the growth of the industry, the survey pointed out.

Consumer electronic manufacturers were of the opinion that in the era of digital convergence, differential taxation policies for IT and consumer electronics products create distortions and anomalous situations.

‘Anomalies’

The Government charges 16 per cent excise duty on televisions, whereas it is 12 per cent for personal computers (PC). Similarly, televisions attract a 12.5 per cent value-added tax rate, while it is 4 per cent for PCs.

There is need to lower excise duty on hardware to 8 per cent for helping the domestic industry.

Although the Government has reduced peak customs duty from 12.5 per cent to 10 per cent, the net effect on imported products will remain the same due to increase in education cess, the survey noted.

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