Countdown To Budget. Consumer durables: Incentivise energy-efficient products

The consumer durables industry is expecting the Budget to bring in incentives to promote domestic manufacturing and boost consumer sentiment, especially to mitigate the impact of demonetisation. At the same time, the industry is hoping for consumer durables products to be placed under the 18 per cent GST slab.

The Consumer Electronics and Appliances Manufacturers Association (CEAMA), the apex industry body’s big demand for this Budget, is that the government should increase the basic customs duty to discourage imports.

Manish Sharma, President, CEAMA, said in line with the government’s ‘Make-in-India’ policy, the industry expects the government to increase the basic customs duty rate on appliances and consumer electronics goods from 10 per cent to 20 per cent to thwart imports of these goods.

The industry is also looking for steps that will boost domestic manufacturing for critical components.

Kim Ki-Wan, Managing Director, LG India, said, “Government’s endeavour is to promote manufacturing in India, there is a need to remove anomaly in the inverted duty structure and extend duty concessions on critical components (locally not available) to improve competitiveness.”

Industry players pointed out that for products such as air conditioners nearly 65-70 per cent of the components need to be imported. Hence, players are also urging the government to take measures that encourage setting up an ecosystem that boosts manufacturing of critical components in the country to achieve the goals set by the government’s policy of ‘Make in India’. In this regard, CEAMA is hoping that the “Phased Manufacturing Plan” is implemented to encourage local manufacturing of components. “These initiatives if implemented will not only will create an eco-system of Electronic System Design & Manufacturing (ESDM) but also help realise the Make-in-India vision,” added Sharma.

With the industry moving towards more efficient energy norms, it also wants the government to give out incentives to consumers and manufacturers to move towards higher star-rated products.

Kamal Nandi, Business Head & Executive Vice-President, Godrej Appliances, said that the industry has been urging the government to give out such incentives for quite some time. Pointing out to the example of five star frost-free refrigerators, he said that the cost of manufacturing these models is very high forcing manufacturers to sell them at steep prices, which makes them too expensive for consumers to buy.

“There should be incentives and tax concessions for manufacturing energy-efficient products, which are the need of the hour and in keeping with the government's focus in this area. This will also encourage consumers to upgrade to more energy-efficient products,” he added.’

The industry is also urging the government to put products such as washing machines, air conditioners and consumer electronics under the GST tax slab of 18 per cent as these products are no more a luxury but a necessity.

Demonetisation did hit sales in the November-December period. Though a report released by Frost & Sullivan and CEAMA last month, stated that the appliances and consumer electronics industry is expected to grow on an average at about 10 per cent from 2015-21.