· Consumer durables like air conditioners, refrigerators and washing machines have become essential household items, more so in this pandemic where consumers are grappling with home isolation, work from home and, inconsistent availability of domestic help. We are hoping this budget will rationalise GST for these products. Increased penetration and volume will boost manufacturing as well. Appliances continue to see low penetration levels. Lower tax slabs will correct this, thereby improving the quality of life for of Indian consumers, particularly women.
· ACs are in the highest tax slab of 28 per cent. We would like the tax slab to be brought down to 18 per cent, given the beating the category has taken after two consecutive summers lost to the pandemic.
· Lowering the GST slab for eco-friendly and energy efficient products further to 12 per cent will not just help to drive demand, but also increase the adoption of sustainable appliances — in line with India’s commitment to climate goals.
· We hope the budget eases the current burden of component shortages and enables an uninterrupted supply chain.
· Equally important, we are expecting policies that will enhance consumption overall, easing the woes of the industry.
Forecast
· Given the low rural sentiment quarter on quarter, we think the budget will be a populist one, talking to Indian masses and focussing on the rural economy.
· Government is expected to focus on employment as well as continue its thrust on improving healthcare infrastructure.
Flashback
· Looking at the past years, introduction of GST in 2017 had a significant impact on the appliances industry that helped reduce indirect tax burden and boosted consumption.
· The PLI scheme launched last year, government’s decision to restrict import of air-conditioners and increase in Basic Customs Duty on key imported components to promote local manufacturing will certainly benefit the industry in the long run, improving indigenous component ecosystem, inviting global investments and generating employment opportunities locally.
Kamal Nandi is Business Head and Executive Vice-President, Godrej Appliances