GST impact: TV, fridge, AC, washing machine prices may rise twice this year

Many firms considering price hikes over next few months to pass on burdens of GST and material cost

Prices of televisions, air-conditioners, washing machines and refrigerators may rise twice this year because of higher input costs and a new tax structure.

Videocon, Panasonic, LG and Whirlpool are considering immediate price hikes to pass on the additional tax burden under the goods and services tax (GST). The rise in material prices over the past few months may be passed on during the festive season.

Prices of steel, copper and plastic have been rising since February. Prices of components like compressors for ACs and refrigerators have risen up by 4 per cent and prices of TV panels have risen by by 3 per cent.

Under margin pressure, companies had postponed price hikes till the festive season. Rajeev Bhutani, vice-president, marketing, Samsung India Electronics, had told Business Standard earlier that the increased cost of TV panels would have to be passed on.

"We have not yet decided the price hikes under the GST. We are also calculating the effect of higher prices of steel, copper and plastic. Hopefully, the increase will be spread over the coming months," said Kapil Agarwal, vice-president, Whirlpool of India.

 

Double Whammy
 

* Prices of key materials such as steel, copper and plastic have been rising since February

* TV-Panels got dearer by 3%, compressors for ACs & fridges by up to 4%

* Manufacturers reeling under margin pressure had to postpone price hikes to avoid impact on demand

* GST comes as second blow with up to 4% rise in effective taxation

* Companies can’t absorb additional costs, may have to hike prices again to pass on input costs ahead of festive season

"We expect prices of TVs, refrigerators and microwave ovens to go up by 3-4 per cent due to the GST," said Manish Gupta, chief financial officer, Panasonic India.

While manufacturers are focused on passing on the additional tax burden of the GST, many are planning a two-fold increase. Videocon is planning price hikes of 2.5 per cent now, but more will be in the offing.

"Increases in prices of components have been set off to some extent due to a marginal drop in dollar prices. But it is very much likely that prices may rise later," said CM Singh, chief operating officer, Videocon.

Executives with other consumer durables makers said steep hikes in the lean season were out of the question. "We will wait till the festive season before increasing prices. Now we are merely passing on the additional tax," an executive said.