As the union budget 2023-24 will be presented soon, the consumer durables industry is optimistic. But here’s a wish list that the industry hopes the finance minister includes this season, in the upcoming budget.
The introduction of the Production Linked Incentive (PLI) scheme by the government has helped boost domestic production and improve exports in several key sectors, including mobile phones and air conditioners. However, there are still several areas where the industry could benefit from further government support. One of these is LED TVs.
The country’s ecosystem for LED TVs has already started to develop, but if PLI schemes were extended to these products, it would help accelerate the development of the complete product manufacturing ecosystem. This would not only help to boost demand for the products in a wide range of prices and types, but it would also help promote domestic production and improve exports.
Another area where the industry is looking for support is that of open cells. Open cells used in electronic products are components that are not domestically produced, are imported, and hence are currently subject to taxes. If these taxes were removed, it would help manufacturers reduce the cost of production and make the end consumer durable products more affordable for customers. This would in turn help soaring demand for more electronic products which are usually high ticket purchases for the common man.
In addition to these measures, the industry is also calling for a reduction in the GST rate on LED TVs bigger than 32 inches. Currently, the GST rate on these products is quite high, which makes them less affordable for consumers. If the GST rate were to be reduced, this would automatically increase demand for large LED TVs and spruce up the sector overall. These adjustments will not only benefit the industry but also push consumers towards more energy-efficient LED TVs and replacing existing CRT TV homes, which will also help to reduce energy consumption and promote sustainability.
The budget itself is being presented at a crucial juncture in time as the world is still weening out of the pandemic and is going through geopolitical uncertainties given the Russian-Ukraine war. The global economy is seeing sluggish growth and inflation. This is why calculative actions to support the growth of domestic manufacturers are important to boost a sector like consumer durables. Actions imposing non-tariff barriers on FG imports in refrigerators and air-conditioners (ACs) are also recommended.
Since ACs and refrigerators are no longer luxury items and in fact are now household essentials, many brands are offering energy-efficient products which pollute lesser and therefore, are crucial for urban areas. This is a cause of great gravity and therefore, the government must support this industry to increase sales of ACs and fridges.
In conclusion, the Indian consumer durable industry has a lot of potential for growth and development. However, there are still several areas where the industry could benefit from further government support. By extending PLI schemes to LED TVs and washing machines, removing taxes on open cells, and reducing the GST rate on larger LED TVs, the government can help to boost demand for these products, promote domestic production, and improve exports. This will help the industry to compete globally and will also help to promote sustainability which is the way forward for global manufacturing. The hope is that the budget expectations of 2023 will meet the needs of the consumer durable industry and lead to a brighter future for the sector.
By Mr. Ankit Maini, Managing Director, Veira Group