High-end consumer durables such as plasma TVs, washing machines and refrigerators may get cheaper by up to Rs 3,600 as manufacturers work out ways to pass on the benefit of the four per cent cenvat cut to consumers.
“Consumer durables maker will certainly pass on the excise tax benefits to the customer and I foresee around 3-5 per cent reduction in prices across the segment,” said Consumer Electronic Appliances Manufacturers Association Secretary General Suresh Khanna.
Following the government notification, consumer durables firms will now have to pay anwyhere between 4-10 per cent Cenvat (as opposed to the earlier 8-14 per cent). The countervailing duty (CVD), too, gets reduced proportionately to the lower excise duty rates, said Shailesh Seth, indirect tax advoctate, adding that “the rates have been reduced not only for finished goods but on inputs like steel too”.
LG Electronics India Head Amitabh Tiwari said: “Our high-end products such as LCD and plasma TVs, refrigerator and washing machines will see a reduction in prices by around 1.6 per cent.”
However, V Ramachandran, Director, Sales & Marketing, LGEIL, said the company was “assessing the price reductions, category by category but has not taken a decision on the price cuts”. He added: “There has been a steady rise in input costs and that could be a reason for manufacturers to hold the prices for now.”
LG is expected to announce its final decision in 2-3 days. Most of LG’s products are manufactured in units located in excise free zones, so there would be almost negligible impact of reduction in excise duty.
Other players in the segment such as Western Electronics, too, hinted at price reductions. “We will definitely look for an opportunity where we can pass on the benefit to consumers. We are working on it and consider it to be positive,” Western Appliances Sunil Shetty said.
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“We are working out a way to pass on the benefits to the consumer as fast as possible. We are pretty sure that these initiatives will stimulate demand,” said Haier Appliances India Director Sales and Marketing R T Rajan.
Samsung, however, is undecided. R Zutshi, Deputy MD, Samsung India, told Business Standard, that “the move comes as a relief for the industry which was facing an input price rise in the first half of the year and later the rupee depreciation had hit the industry hard too. We are working out the full impact of the reduction and would be taking a decision soon on prices. How much could be pased on to the customers is yet to be decided.”