Excise duty changes for solar modules inputs, PCB, tobacco and its impact

Additional duty on PCB could put pressure on the already squeezed margins of mobile manufacturers

In a setback to domestic manufacturing of solar modules, the government has imposed a 6% excise duty on inputs for its manufacturing. The excise duty was nil. The countervailing duty on the imports of solar cells and modules, on the other hand, has been decreased to 6% from existing 12.5%.

Similarly, for quite sometime the government is trying to bring in investment in local manufacturing of electronic goods to reduce foreign exchange outgo, a 2% special additional duty on populated printed circuit board (PCB) could put pressure on the already squeezed margins of mobile manufacturers.

PCBs are mostly exported from Taiwan and China at present and the move may lead to price hikes as most of the companies are already hard pressed and further cost absorption going to be tough.

"The budget allocated towards MSIPs and EPF looks progressive and will surely reduce dependency on imports in the industry", said Manish Sharma, president & chief executive officer, Panasonic India & South Asia, and executive officer, Panasonic Corporation.

For cigarette makers, the impact would lessen with excise duty being raised by 6%. Though it would adversely impact major manufacturers as branded cigarette sales have been under pressure for quite some time, the rise is lowest compared to past five years.

Largest player ITC's volume sales had gone down in the past due to regular price hikes effected to recover additional cost in terms of duty hikes. Prices of other tobacco products like chewable tobacco too may go up as well since the finance minister has increased tax burden on them.