The Finance Minister tabled the Budget on a positive note to drive the Indian economy up on the global value chain. Balancing both the strategic and tactical initiatives, this budget lays impetus on the seven key priority areas. While continuing to invest on growth, there is a balance between that and fiscal discipline. Inclusive development, reaching the last mile, focus on infrastructure and investment, unleashing the potential, green growth, youth power and financial sector – all aimed at inclusive growth.
A 33 per cent increase in capital investments outlay for the infrastructure build-out will naturally have a positive impact on the industry and thereby, the common man. Meanwhile, the reduction in tax slabs will leave the middle and salaried class with more discretionary income thus stimulating demand and driving consumption. These triggers will have a positive cumulative impact on the consumer durables industry, propelling the industry towards growth.
Outlay for energy transition
The investments planned by the government to set-up a Centre of Excellence (CoE) for AI in top universities, 100 labs for 5G applications are truly commendable. This kind of initiative was required for academia to build technologies and human potential. Another initiative that was impressive was the Rs 35,000 crore outlay for energy transition to concessions on equipment for Lithium-ion cells.
Over the last few years on electric mobility space, both on demand and supply side, number of incentives have been given and this one is on transition and focuses on stationary storage of large applications. These initiatives have resonated with me as they will not only pave the way for digitisation but also help implement GoI’s broader narrative of ESG aimed at sustainable innovation.
Furthermore, it is encouraging to see reduction in custom duties for inputs and parts of certain electronic items like Lithium-ion batteries, TV (open cells) and Camera lenses. This is likely to improve the feasibility for enhancing backward integration and local manufacturing of electronics and subsequently enable manufacturing of open cell in India. However, whether this will lead to price reduction is doubtful as there is not likely to be much impact on manufacturing costs by reduction of duty from 5 per cent to 2.5 per cent for certain components of open cells.
Higher sales of TVs
Against the backdrop of the pandemic, we did see increasing demand for electronics and appliances but not the kind of growth that would accelerate demand on a large scale. With increasing discretionary income, we hope for higher sales of mid to large segment of televisions, essentially 40-50 inches which are the belly of the industry. Air conditioner penetration stands at just 6.5-7 per cent so there is a huge potential here too.
Today, consumer durables such as ACs, refrigerators, TVs, microwave, washing machines and so on are no longer a luxury but a necessity for living spaces. While this is not a budget item, we would still like to table it for future consideration - lowering the GST slab to 18 per cent from 28 per cent would have helped offset the price pressure and spurred demand for both air conditioners (split and window) and TVs (above 40 inches), thereby improve affordability among customers.
Overall, the well-articulated budget heralds good news for both the industry and the common man. From investment in CoE and AI to tax reliefs for middle and salaried class, the Union Budget 2023 sets a precedent for Amrit Kaal
Manish Sharma, Chairman, Panasonic Life Solutions India