Firms like Canon and Philips are mulling to pass on the benefit of the excise duty reduction announced in the Budget to consumers, while FMCG company Britannia may increase the prices of its products due to the 1% hike in excise duty.
Moreover, candymakers might be forced to phase out 50 paise candies from the market due to hike in excise duty from 4% to 5% on confectioneries.
"This higher rate of duty increases overall costs and further adds to the high burden on food categories arising from the unprecedented increase in input commodity costs. We continuously review the total impact of these changes and will take price increases as appropriate," Britannia Spokesperson said.
Candymakers such as Parle Agro which sells 'Mintrox' and 'Buttercup' and Perfetti Van Melle that make 'Alpenliebe' and 'Big Babol' have expressed concern over the hike saying that it will have a negative impact on the industry.
"The increase in the excise duty of sugar confectionery will definitely have an impact on the industry. It could lead to price hikes or reduction in the size of the confectionery. Any change in the MRP would impact market share hugely," Parle Agro Joint Managing Director and Chief Marketing Officer Nadia Chauhan said.
"We could see an increase in the number of Rs one brands and heading in this direction over time, the 50 paise category could get eliminated just as the 25 paise did in the past," she added.
Expressing similar concerns Perfetti van Melle Chief Finance Officer Ramesh Chari said the 50 paise category could see a phase out going ahead, even if not in the immediate. At present, the firm sells most of its candy brands under the 50 paise category.
However, Perfetti van Melle said it will absorb the excise duty hike which will hit the company's bottom-line.
On the other hand, there is some good news for consumers also. "With the duty reduction on printer parts, servicing inkjet and laser printers will become cheaper for consumers," Canon India Senior Vice President Alok Bharadwaj said.
Even Philips is contemplating the actual impact of the excise duty reduction on the company and the subsequent effect on product prices.
"Reduction of taxes and an active participation by key lighting companies will definitely make an impact on the end consumer in promoting the use of energy efficient lighting solutions," Philips India Head and Philips Lighting Managing Director Rajeev Chopra said.
In the Union Budget 2011-12, the Finance Minister has reduced the excise duty on LED bulbs from 10% to 5%.
