Consumer durables set to be cheaper on excise duty cut

Consumer durables set to be cheaper on excise duty cut

New Delhi: Consumer durables are set to become cheaper as manufacturers consider price cuts to pass on the 4% excise reduction announced by the government last week.

The move, however, is not likely to spur demand soon as consumers are cutting back on shopping in an uncertain economic environment.

While Samsung India Electronics Ltd has already announced a price cut on its LCD TV sets between Rs500 and Rs10,000 effective Thursday, rivals LG Electronics India Ltd, Godrej Appliances, a division of Godrej and Boyce Manufacturing Co. Ltd, and Sony India are reducing prices across product categories by 2-4%.

Samsung, however, will not reduce prices of its high-end products, such as front-loading washing machines, as most of these items are imported and the excise duty reduction does not apply to them.

“We will introduce a cut of 4% across product categories," said Kamal Nandi, vice-president, sales and marketing, Godrej Appliances.

LG Electronics India, which had raised prices between 3% and 4% of some its products around Diwali, is now considering a reduction.

“While in the categories which we were planning to take price hikes, now we will not," said V. Ramachandran, director, sales and marketing at LG. “But this reduction will be done progressively."

Even companies such as Sony India, which does not manufacture products locally but depends on imports, have cut prices of digital cameras and handycams this week by about Rs5,000 in an attempt to attract consumers. Other Sony products are, however, soon likely to be dearer. “The company has already indicated to us that the prices of other products will go up in January because imports have become expensive due to the weakening of rupee," Rajesh Luthra, a shopkeeper who sells LG and Sony products in Delhi, said.

The move to pass on the excise duty cuts to consumers is not likely to stimulate demand anytime soon as consumers are only making necessary purchases at the moment, industry representatives said. Also, it will take some time for dealers to clear up the earlier stock and sell products at the revised rates.

“It will take at least six months to see whether the demand will go up or not. Customers are right now buying only what they need. There are no impulse purchases happening. Also, the sales of high-end items are getting affected," said Guatam Chawla, director, Shivavision Pvt. Ltd, a dealer of LG products.