After the country’s auto sector, which has been gripped by a year-long slowdown, it’s the turn of consumer durables segment now. Fear of a slump is on the horizon, with flat sales of televisions, washing machines, refrigerators and other appliances forcing the industry to demand a reduction in Goods and Services Tax (GST) and import duty on several items. However, given the lower tax revenue, the Union finance ministry is in no mood to relent.
According to Consumer Electronics and Appliances Manufacturers’ Association, TV panel sales have declined again. Sale of other home appliances like washing machines and refrigerators have seen flat growth in July, due to low consumer sentiments.
Manufacturers are now lower GST and exempt import duty on many items to boost demand ahead of the festive season. “It is recommended that tax on goods falling under categories like cement, consumer durables, automobiles and automobile components should be reduced to 18 per cent,” said industrialist Ajay Piramal.
Heads of auto sector, which is hit the worst by the slowdown, had recently met the finance minister and unanimously sought a reduction in GST to 18 per cent from 28 per cent.However, the finance ministry, which has held a series of meetings with India Inc, bankers and captains of the industry, is reluctant to reduce GST, given the low tax collections.
“While we are working on various measures, GST cuts are not feasible at this point of time. Tax collection is much below the expectations, and any reduction in corporate tax or GST will upset the fiscal math. We have already ruled out GST cut on cement,” a senior finance ministry official said.
The PMO had recently asked the revenue department how it will meet the shortfall this year.
However, India Inc feels there’s a paradox. “I can well understand the government’s hesitancy in looking at GST concessions. But auto industry contributes above Rs 1,80,000 crore in revenue to government treasuries. The paradox is that while the government needs to be lauded for its fiscal responsibilities, the current slowdown in the auto sector poses a greater threat to the financial arithmetic,” Anand Mahindra, chairman, M&M, said at the AGM.
A glimmer of hope
The Industry is keeping hopes on festive season sales starting August 15, but is also worried about the flood situation in the country. CEAMA president Kamal Nandi said Onam festival and banks cutting interest rates following RBI’s repo rate cut should help in bringing more disposable income in the hands of consumers. A likely normal monsoon will ensure good agriculture output and can spur sales, he said
Hit by low sentiment
After initial surge in demand during the ICC World Cup, TV panel sales have again witnessed a decline. Manufacturers attribute this to lower consumer sentiments
Sales of other home appliances like washing machine and refrigerators have also witnessed flat growth in July, due to lack of growth in demand