Finance Minister, Nirmala Sitharaman, on July 5, 2019, presented her maiden budget in the Parliament. She committed that India will grow to become a USD 3-trillion economy in the current year. While making other announcements, the Finance Minister decreased GST from 28 percent to 18 percent on consumer electronic items including refrigerators, washing machines, vacuum cleaners, storage water heaters, and televisions up to screen size of 32 inches. The industry was disappointed as it had made representations for inclusion of TVs above 32 inches in the 18 percent slab and air conditioners and refrigerators with a rating of 4 stars and above under the 12 percent slab.
The Union Budget 2019-20 sends a clear message that the momentum for the Make in India initiative shall continue. Import of split air conditioners, indoor and outdoor units, will now each attract customs duty of 20 percent. While outdoor units have by and large been indigenized, indoor units have yet to achieve the same degree of localization. This will impact the smaller brands too, which were continuing to pay 10 percent duty by importing the indoor and outdoor units separately. The waiver of duty on capital goods for manufacture machinery to make open cells (for television sets) and populated PCBs will encourage suppliers to set up manufacturing in India.
The sweltering, hot summer is poised to give way to the monsoons, albeit delayed. The air conditioners were the ones to benefit most. While inventory levels normalized and sales of room ACs were strong, the manufacturers did not get a window to pass through import duty hikes and costs of currency depreciation as price hikes remained limited.
Sports continue to provide impetus to TV sales. The Women’s World Cup lasted for a month, June 7 to July 7; and on the cricket front, IPL-12 held fort from March 23 to May 12, after which the 2019 ICC Cricket World Cup took over from May 30 to July 14, 2019.
We welcome the consumers back from their summer holidays and look forward to a better H2!