Consumer durable MNCs also chant the ‘Make in India’ mantra

MNCs in the consumer durables category are increasingly following the ‘Make in India’ policy to keep prices low.

The end of concessions on excise duties has resulted in countervailing duties going up another 2 per cent. This has led to imports getting more expensive, prompting companies manufacture within India to prevent further price escalation.

(Countervailing duties are imposed to counter the negative impact of import subsidies to protect domestic producers.)

“Since the consumer pyramid is largely tilted towards the first-time buyer for such categories as refrigerators and washing machines, we have to have to keep price-points down and have products designed and made in India,” said Shantanu Dasgupta, Vice-President (Corporate Affairs & Strategy), Whirlpool India. The American company, which specialises in home appliances, manufactures most of its washing machines and refrigerators in India but continues to import some of its cook-tops and kitchen hoods from Europe.

Price hikes “We have positioned ourselves as a mass premium brand in India though most of our built-in appliances are imported from Europe. But with the reduction in excise duties being taken away we will have to raise prices,” added Dasgupta.

Even Korean player Samsung, which has been making its televisions and washing machines at plants in Bangalore and Noida, now plans to make its high-end curved TVs in India.

Rajiv Mishra, Vice-President, Media, Samsung Electronics India, said: “Almost 90 per cent of our products are made in India and we will also start manufacturing the curved televisions shortly. In fact, Samsung not only produces in India but also exports to neighbouring countries like Bangladesh.” Samsung Electronics India also invests 7 per cent of turnover on R&D to develop products suited to the Indian market.

LG India also manufactures all its air-conditioners and televisions in India, with the exception of curved TVs.

Saurabh Baisakhia, Business Head ACs, LG, said: “All our ACs are made in India but the withdrawal of concessions on excise has also resulted in countervailing duties going up by 2 per cent. We also expect prices to go up by a similar level as a result of this.”

Drop in sales Consumer durables players have already been feeling the pinch of the drop in sales during Diwali last year and price increases may not bode well for the industry.

As Dasgupta of Whirlpool added: “Since discretionary spends are down, with consumers deferring purchases, growth has become a challenge for durables players.”

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