The domestic consumer electronics industry has sought lowering of goods and services tax (GST) and waiver of import duty for inputs used to make components locally.
In a Budget recommendation to the government, industry body Consumer Electronics and Appliances Manufacturers Association’s (CEAMA’s) president Kamal Nandi said lowering GST for eco-friendly and energy-efficient products like air conditioners and refrigerators to 12% will drive demand and increase adoption of sustainable appliances.
“The upcoming budget should offer incentives for manufacturers to produce these energy-efficient products which will be in line with the governments focus on sustainability,” said Nandi, business head at Godrej Appliances.
The government has reduced GST for most appliances except air conditioners and large screen television sets (above 32-inches), which continues to be in the highest tax slab of 28%. Other products attract 18% GST.
“Lowering the tax slab to 18% would help offset price pressure and spur demand for both air conditioners and televisions above 32 inches, as both have a huge opportunity for volume growth,” said Nandi. “The reduction in tax slab would help in improving affordability among customers and attracting investment in component manufacturing. This will help in penetrating the market.”
At present, the penetration of refrigerator is at 33%, 12% for washing machines, followed by air conditioners at 5%. For television sets, the penetration is 65%. Nandi said the industry has largely been stagnant this year and with increased customs duties, global economic changes and fluctuations in currency and commodity markets, demand for next year is difficult to predict.
“Indian component suppliers are facing difficulty in competing with cheap Chinese imports. The government should consider initiating some measures to reduce the input cost to make these components by waiving duty on the inputs imported to make the components,” said Nandi.
Nandi said any expenditure incurred for taking professional help in aesthetic designing, prototyping and electronic controls designing, among others, from external design houses and enterprises should also be allowed as R&D expenditure.
“To promote domestic manufacturing and ‘make in India’, the government must launch a scheme where preference should be given to locally manufactured goods over the imported ones,” he said. GST Station