Consumer Durables To Get Costlier: Budget 2012

The Union Budget 2012-2013 is a no budget from some people's point of view. Some have rated it 6 out of 10, others say there is nothing of interest for the Aam Aadmi. As for the consumer electronics industry, the budget means price hike for end customers. With the increase of 2 per cent excise duty and service tax, the prices of consumer durables like air conditioners and refrigerators are set to increase. "The budget does not bring any relief to the consumer electronics industry, which has been reeling under the impact of rising input costs and rupee depreciation in recent times. The rise in excise duty may lead to an increase in prices of consumer electronics products,” said Mahesh Krishnan, VP-home appliances, Samsung India.

One of the major expectations of the appliances and consumer electronics industry was the implementation of Goods and Services Tax (GST), which fortunately was announced in the current budget. The finance minister of India, Pranab Mukherjee, said in his budget speech that GST will be operational by August 2012. While this has been appreciated by the industry, many are not happy as the exact road map has not been announced yet. "I expected GST road map to have been announced and it has not come. This is sad news. The implementation of GST by August is just a statement, nothing concrete has been announced yet," said Rajeev Karwal, founder and CEO, Milagrow Business & Knowledge Solutions. Commenting on the hike in excise duty, Karwal said, "The increase in service tax and excise by 2 per cent will frankly have no real impact on prices and most enterprises will take it in their stride."

Another major announcement made by the finance minister was the move to cut customs duty on memory cards for mobile phones. The excise duty of one per cent on mobile phones has been retained at the same level and not been increased. The current budget is being welcomed by the mobile handset manufacturers as. "The exemption of mobile phone parts from basic custom duties while bringing down the manufacturing cost of mobile phones will aid in deeper penetration of mobile phone manufacturers into the untapped portions of the Indian market," said Pradeep Jain, managing director, Karbonn Mobiles. 

Also, the reduction of around 150 to 200 per cent in income tax on expenditure for manufacturing and R&D services will help in the growth of Indian manufacturing companies, said S N Rai, co-founder and director, LAVA International Ltd. “There is no change on the custom duty and they have continued commercial rates of the duties part which is already there," he said.

Also, the prices for LCD and LED panels are set to come down after the budget announcement. “The announcement to reduce the excise duty on LED lamps by 6 per cent will go a long way in ensuring that clean energy products are affordable to a larger section of the Indian populace. This move will also help us in conserving environment better,” said V P Mahendru, chairman and managing director, Eon Electric. 

There is still some time to go before companies can concretely announce the extent of price hikes in different categories. Till then, consumers can start ticking off items from their wish list.