Why energy-efficient products not subsidised, asks industry

Consumer durables firms, which saw muted sales last summer due to bad weather, stubborn inflation and rise in cost of funds, are a disappointed lot as the Budget has not offered any subsidy for energy-efficient products.

"The disappointment with the Finance Minister is that he always said we want to promote energy efficiency. Then why not lower the duty for five-star rated air conditioners? You are taxing all the appliances at the same rate," Blue Star president for air-conditioning and refrigeration products, B Thiagarajan, said.

Godrej Appliances chief operating officer George Menezes said: "We had made a representation to the government, but it has not given any stimuli to increase the penetration of appliances. "With this kind of a Budget, I see a further dampening of sale. As against expected stimuli to consumption in the home appliance space, where penetration levels are very low vis-a-vis other BRIC economies, we have a situation here where taxes have gone up which will further dampen growth."

Budget increased Excise duty from 10% to 12%.

The industry also expressed displeasure over absence of timeline to roll out the goods and services tax (GST).

"The least the government can do is to lower the tax for a five-star rated product. They don't even want to consider that. For everything, they want GST to come, but we don't see that happening anytime soon," Thiagarajan said.

Five-star rated products consume 20% less electricity. The industry believed if it was given subsidy to manufacture five-star rated products, they could be sold on par with the less energy-efficient ones.

"If other products are charged 12% excise duty, why not a five-star rated product charged lower?" Thiagarajan asked.

Panasonic India sales and marketing director Manish Sharma said: "Subsidy on five-star rated may definitely drive energy-efficient product sales."