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Budget Wishlist | Modify indirect tax structure on consumer durables

Budget Wishlist | Modify indirect tax structure on consumer durables
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First Published: Thu, Feb 28 2008. 05 59 PM IST

Pranay Dhabhai, COO and director, Haier Appliances India
Pranay Dhabhai, COO and director, Haier Appliances India
Updated: Thu, Feb 28 2008. 05 59 PM IST
Pranay Dhabhai, COO and director, Haier Appliances India
Modifications to the indirect tax structure, especially for products in the fast growing category such as air conditioners and refrigerators, will benefit the consumer ultimately. Not only will he get goods cheaper, but the rationalization would also facilitate greater penetration of consumer goods in the Indian market.
The consumer durables industry expects tax rationalization from Budget 2008, which could impact product prices for consumers. We believe demand will be back in the market after a period of lull and the economies of scale will start to kick in. The main demand of the industry from the budget is a cut in import and excise duty and correction of the inverted customs duty structure, especially with respect to the free trade agreement (FTA) with Thailand. We would also like the government to lower VAT from 12.5 % and bring it at par with the IT industry.
How is Budget 2008 likely to affect the market?
Most consumer durables have recorded double-digit growth in 2007. According to the latest data available, TV sales have grown 11%, while refrigerator sales grew 13% and washing machines, 17% during January-November last year. Air conditioners recorded over 50% sales growth. During the first six months of the current fiscal, the industry recorded a growth rate of 13%, which is higher than the 11.5% growth rate for the whole of 2006-07 and 8.5% growth rate for April-September 2006.
Significantly, rural markets, which account for about 70% of population, have been growing at a higher rate of 25% compared to 7-10% growth rate of urban consumer retail market. We can also expect a much bigger thrust on continued infrastructure investment by the Government of India, which would be positive for the country and good for the markets.
The writer is COO and director, Haier Appliances India
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First Published: Thu, Feb 28 2008. 05 59 PM IST