Looking to Make in India

Meenakshi Verma Ambwani | Updated on January 27, 2018



Excise duty cut isa key demand of the sector

It is not only the infrastructure sector, but also the domestic consumer durables industry that is looking for opportunities that the Make in India programme will throw up. The durables industry is hoping that the initiatives announced by Finance Minister Arun Jaitley on February 29 during the Budget presentation will help boost demand as well as incentivise manufacturing in the country.

An excise duty cut on consumer appliances is one of the key demands of the industry that is facing a fall in demand. The government had doled out excise duty sops for consumer durables in 2014, which were later rolled back.

“With the fall in rupee, the sector is eagerly awaiting a Budget that can stabilise the economy and give a boost to the struggling industry. A reduction in excise duty from 12 per cent to 10 will bring relief,” said Anirudh Dhoot, Director at Videocon Group.

The Bureau of Energy Efficiency has been working towards stricter energy efficiency norms, which have also contributed to rising costs for the industry and rising prices for the consumers.

“As the energy efficiency norms are getting tightened, industry players are finding it challenging to make some of the five-star rated products in categories, such as frost-free refrigerators, as the cost is exorbitant.

“Consumers cannot afford them due to such high costs. The government needs to incentivise consumers to upgrade to higher star rated products,” explained Kamal Nandi, Business Head and Executive Vice-President, Godrej Appliances. The consumer durables industry has been seeing muted growth of 4-5 per cent year-on-year for the past four to five years. Industry players say, for the growth rates to be sustainable, the industry needs to grow at about 10-15 per cent and this requires measures to boost demand.

Shantanu Das Gupta, Vice-President, Corporate Affairs and Strategy, South Asia, Whirlpool, said the industry is hoping the Budget will lead to more disposable income in the hands of the consumers to spur consumption.

The industry is also hoping that the government will remove inefficiencies in the system posed by the inverted duty structure.

Industry players are urging the government to remove basic customs duty levied on import of components used to make appliances such as refrigerators, air-conditioners and washing machines.

Nandi said this will ensure a level playing field for the industry and encourage companies to manufacture appliances locally rather than import them into the country.

Kim-Ki-Wan, MD, LG Electronics India, said Make in India must be incentivised for Indian products to be competitive in the world markets and must be supported by the development of a world-class infrastructure to reduce transaction cost and overheads.

Also, companies are hoping for a lower rate of taxes with the implementation of GST.

Wan said, “Tax reforms implementation should include a fast roll out of GST, so as to have an equitable tax system and unified market which, in turn, can improve efficiency and competitiveness. Simplified and transparent tax policies will improve ease-of-doing business and reduce litigations or disputes, thereby building investor confidence and supporting the Make in India campaign.”

Published on February 15, 2016

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