Macro Economy

Fridges, TVs could get marginally cheaper

Our Bureau New Delhi | Updated on March 12, 2018 Published on February 17, 2014

Excise duty on consumer, capital goods cut to 10%

A breather for consumer products and capital goods makers came in P Chidambaram’s first interim budget that proposed to reduce excise duty from 12 per cent to 10 per cent. However, the impact on prices for consumers is not expected to be significant on products such as washing machines, television sets, vacuum cleaners and refrigerators.

Industry veteran and former Mirc Electronics CEO YV Verma said depending on the evaluation by the companies, they may pass on price reduction of about 1.5-2 per cent to consumers as benefits of the excise duty cut. For example, a flat panel TV that starts from about ₹20,000 may get cheaper by about ₹400.

Companies such as Panasonic and LG said they are assessing the impact and reviewing aspects regarding pricing.

Panasonic India Managing Director Manish Gupta said the move will help stabilise and provide growth opportunities to the consumer durable players, whose margins have been under pressure due to depreciation of the rupee and rise in price of raw materials for some time now.

Stating that this move will generate a positive consumer sentiment and encourage new buyers in the consumer durable sector, LG India MD Soon Kwon added: “We are closely observing the market dynamics and reviewing various aspects regarding pricing.”

Shanatanu Dasgupta, VP, Corporate Affairs & Strategy, Whirlpool India, said this brings in relief for consumer durable firms. It remains to be seen whether it will have a significant impact for consumers, but players may not hike prices, he added.

Meanwhile, Anil Rai Gupta, Joint Managing Director, Havells India, said: “The excise duty cut will definitely spur the demand cycle. The benefits will be passed on to the consumers and we believe the prices will go down by about 2 per cent across our products.” Besides cables, wires and switchgears, the company also sells domestic appliances including juicers, mixer and grinders besides fans and geysers.

At the same time, Kamal Nandi, Executive VP, Sales & Marketing at Godrej Appliances, said the decrease in the excise duty will boost positive purchase sentiments. “However, a 2 per cent drop in excise duty against an average price increase of 10-12 per cent over the last two years may not propel growth in the appliances industry,” he added.

ADA Ratnam, President and Sector Head -Philips Consumer Lifestyle, said: “Given that this is only an interim budget which will have a limited time period of about three months only, we hope the next Government also prioritises these products from lifestyle categories in their Budget plan, so that there is a definite impact on end consumers across these lifestyle categories such as kitchen appliances, trimmers, shavers and garment care, etc.”

Published on February 17, 2014
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