Budget 2021: Consumer durables makers seek respite from inflation, taxes

Consumer durables manufacturers, grappling with a recent surge in raw material cost and falling demand, have asked the finance minister for budgetary measures that will reduce cost pressures and improve the purchasing power of consumers.

With prices of key raw materials such as copper, steel and plastic on the rise since at least November, players operating in most durables and electronics categories like refrigerators, televisions (TVs) and washing machines are feeling the pinch. Prices have been hiked across the industry, resulting in steady fall in sales post-Diwali. To address any further slide in demand, manufacturers are now demanding rationalisation of indirect taxes on large appliances.

Manish Sharma, president & CEO, Panasonic India and South Asia, has urged the government to lower tax rates on two key categories — air conditioners (ACs) and TV sets. Since these items are no longer considered luxury goods, ince­ntivising manufacturers for highly efficient products would help keep prices in check and attract investments in component manufacturing, he arg­ued. Currently, all ACs and TV sets larger than 32 inches are taxed under the 28 per cent slab.

“The continuous tightening of energy norms and increasing R&D and material cost have put upward pressure on prices for energy-efficient products, further dampening the consumer sentiment. Lowering the tax slabs for eco-friendly and energy-efficient products like ACs, refrigerators and washing machines will drive demand and increase the adoption of sustainable appliances by consumers,” said Sharma.

According to Avneet Singh Marwah, CEO of Super Plastronics, the government may need to remove the Customs duty on TV panels. “Panel costs have recorded a steep surge in the past few months. We have urged the government to bring down the 5 per cent duty on panels to zero,” he said. Additionally, to add impetus to the local TV manufacturing ecosystem, manufacturers are demanding an extension of the production-linked incentive scheme to include TVs. Like its larger peers, small appliances major Usha Inte­rnational, too, is feeling the heat.

“The recent abnormal surge in the price of raw materials and freight costs have cast a shadow on sales forecasts for the forthcoming summer mo­nths. We hope that the government will prioritise the mea­sures necessary to control cost inflation with liberal Budget allocation focusing on streng­thening the domestic manufacturing and component ecosystem,” said CEO Dinesh Chhabra.

While the demand to lower GST rates for durables has not been met, many manufacturers like Panasonic have also proposed a rise in tax deductions for individuals, which will increase disposable income.

Retailers Association of India (RAI) has demanded certain measures that it believes will help improve the overall consumer goods industry. In its suggestions to the government, RAI has sought registration of retailers under the MSME category, quicker adoption of Model Shops and Establis­hment Act by states and the extension of Pradhan Mantri MUDRA Yojana Scheme to include financial support for digitalisation to kiranas and small retailers.