Need to make appliances affordable
We are optimistic about the forth coming budget and expect it to be a balanced combination of a reformist and a populist budget. Over the past few years, the Government has introduced several critical reforms like GST, Gram Awas Yojana (Affordable Housing), Ujjawala Yojana (Social Welfare scheme), Gram Jyoti Yojana and Saubhagya Yojana (Electrification project), the Make in India initiative - along with several others that have a significant and direct impact on the consumer durable industry. The 2018 budget is expected to be stable to continue implementing the reforms already announced.
Consumer appliances, such as air conditioners, refrigerators, washing machines and others, are no longer considered luxury items but necessities that improve and spur people productivity. Such consumer appliances need to be made more affordable to the consumers and therefore be put in a lower tax bracket - from 28 to 18 percent. There should be further tax reductions on energy efficient products - 12 percent for 5 star and 4 star products, to increase the adoption of sustainable appliances by Indian consumers. There should also be incentives for manufacturers to produce energy-efficient products which will be in line with the Governments focus on sustainability as well as its Make in India initiative.
Appliances industry is expecting the Budget to bring in incentives to promote domestic manufacturing and increase consumers adoption of appliances.
Kamal Nandi, Business Head and EVP, Godrej Appliances
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Taking Make in India to the next level
2017 was certainly a year of change. Implementation of RERA, GST and other Policy directives did create a buzz and affected different stakeholders differently. Despite input credit being passed on to the customer, with GST @ 12 percent, there is a marginal increase in the overall cost impact to the consumer. This needs to be revised downwards, to benefit the consumer, leading to a further push in sales volumes. In the GST regime the Input Tax credit is available on taxes paid on materials bought for construction which can be the adjusted against the GST liability, the effective tax rate post adjustment is quite high as compared to the old rate of 5.5 percent.
This Union Budget, we hope Government will take a step towards making solar installations mandatory, especially for new housings. With this, it is expected that funding from Government will be required to drive aggressive awareness, especially for hot water. We expect Government support to incentivise consumers and manufacturers and promote adoption of this Green Technology considering the concept of Smart Cities has a direct correlation with Smart Energy.
We believe that, to take Make in India to the next level, the import duties on the raw materials need to be toned down and import duty on finished goods is to be increased, so that the manufacturing sector in India gets a boost. This will also help generate enormous employment opportunities, foster innovation and enhance skill development. Also, the interest cost of borrowing is to be brought down to boost the investment and consumption to spur growth.
V. Ramnath, Managing Director, Racold Thermo Pvt. Ltd.
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