Consumer appliance makers have sought a waiver of import duty for inputs used to make components locally and a stimulus package that will lead to more money in the hands of people in the upcoming Budget to spur consumption.
“As far as electrical appliances industry is concerned, the need of the hour is to revive consumer demand. We expect the government to reduce personal income tax as this will directly put more disposable income in the hands of consumers providing a fillip to the demand,” said Atul Jain, Chairman, Indian Fan Manufacturers' Association (IMFA).
Neeraj Bahl, managing director and CEO, BSH home appliances, India concurred, “The appliances industry saw a flat growth in 2019, and we look forward to constructive policies to drive growth in the sector. We are hopeful that the Budget will focus on regaining consumer confidence by way of personal tax cut to boost demand,” he said.
Acknowledging that the consumer electronics and appliance industry is facing multi-pronged challenges, Kamal Nandi, president of industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA) said, “Budget 2020 should provide incentives for manufacturers to encourage production of energy-efficient products including refrigerators and air conditioners to increase adoption of sustainable appliances."
CEAMA sought a GST relief on eco-friendly products like air conditioners and refrigerators to 12 per cent.
According to industry executives, pricing of products is the biggest determinant for white goods sales in India and an increase in prices on account of Bureau of Energy Efficiency (BEE) rating changes will have a bearing on customer sentiment.
Typically, a 1-star jump in the energy efficiency rating translates to a 4-5 per cent hike in product prices, keeping other things constant.
"BEE transition will be a boost in conserving energy and reducing carbon footprint, but it would also lead to an increase in prices because of increase in input cost. We expect the government to lower GST on fans to 12 per cent rate from 18 per cent to push demand, especially in the rural sector, to help the sector grow at a faster rate,” said Jain, who is also the executive vice-president of Orient Electric Limited.
While new energy labelling norms are now applicable for refrigerators, it is set to be implemented for air-conditioners and fans from January 2021 and July 2020, respectively.
Nandi also pointed out that the domestic component suppliers are facing difficulty in competing with cheap chinese imports.
"The government should also consider initiating measures to waive duty on the raw materials imported to make the components at a time when the industry is seeing stagnant growth with increased customs duties, global economic challenges and fluctuations in currency."