New Delhi: Consumer durables industry wants the government to extend the reduced excise duty beyond December 31, stating a higher tax could lead to increased product prices that may affect already sluggish sales.
"We have asked the government to extend the excise duty benefit failing which we will be forced to increase prices. Our costs have gone up. Rupee has weakened and there is additional cost to comply with new energy norms for refrigerators," Haier India President Eric Braganza told PTI.
He is also Secretary of industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA).
Agreeing with Braganza, Whirlpool of India Vice President (Corporate Affairs and Strategy Asia South) Shantanu Das Gupta said demand for consumer durables is very sluggish and the industry needs excise duty benefit to support growth.
"The belief that we were beginning to see the revival of growth has been proved wrong with poor sales in November and December," Das Gupta said.
When asked if Whirlpool will consider increasing prices in January, he said: "We will wait till we see the announcement from the Ministry of Finance. We are hopeful that the concession will be extended, and we hope that it will be for a longer period. Similarly, we will closely watch the movement of currency over the next fortnight before taking a decision."
In its interim budget in February 2014, previous UPA government had announced 2 percent cut in excise duty on consumer durables at 10 percent. This was extended by another six months by the current government in July and ends on December 31, 2014.
Another issue that consumer durables makers are facing is new energy efficiency norms that direct cool refrigerators manufacturers to comply with from January 1, 2015, which would increase their cost.
As per the Bureau of Energy Efficiency, the energy efficiency ratio for all star bands in direct cool refrigerators would go up from January 1, 2015. It would mean that for the star bands ranging from 1 to 5, companies will have to decrease the energy consumption for each of the rating increasing costs in turn.
The companies have been already up against high input costs due to weakening rupee.
While Panasonic India did not comment on hiking prices, its MD Manish Sharma said: "For Panasonic, consumer satisfaction is of utmost importance, we try and absorb as much cost as possible so that consumers don't feel the pinch."
However, he added: "We hope that further extension will be considered by the government with regard to excise duty benefits resulting in a growing economy."
