Appliances, consumer electronics industry seeks tax relief, incentives in upcoming Budget

Manufacturers of appliances and consumer electronics are seeking lower taxes on eco-friendly and energy-efficient products, more incentives for domestic manufacturing and waiving of customs duty on inputs imported to make the components in the upcoming Union Budget.

The Consumer Electronics and Appliances Manufacturers Association (CEAMA) has urged the government to offer incentives for manufacturers to produce energy-efficient products which will be in line with the government's focus on sustainability in a pre-budget memorandum.

"Lowering the GST tax slabs for eco-friendly and energy-efficient products like air conditioners (4 star, 5 star models) and refrigerators (direct cool and frost-free) to 12 per cent will drive demand and increase the adoption of sustainable appliances by Indian consumers," said CEAMA President Kamal Nandi.

"The upcoming budget should additionally offer incentives for manufacturers to produce these energy-efficient products which will be in line with the governments focus on sustainability," he said.

Finance Minister Nirmala Sitharaman is scheduled to present the Budget for financial year 2020-21 on February 1.

According to CEAMA, the industry has largely been stagnant this year and with increased customs duties, global economic changes and fluctuations in currency and commodity, the demand levels for next year are difficult to predict.

Indian component suppliers are facing difficulty in competing with cheap Chinese imports, it said.

"The government should consider initiating some measures to reduce the input cost to make these components by waiving duty on the inputs imported to make the components," said Nandi, who is also Godrej Appliances Business Head & Executive vice president.

"Besides this, the government should also focus on the promotion of R&D and incentivisation of local manufacturing. The government should reinstate the reimbursement of R&D expenses to 200 per cent," he said adding that "additionally, any expenditure incurred for taking professional help in aesthetic designing, prototyping, electronic controls designing etc should also be allowed as R&D expenditures."

Panasonic India and South Asia President and CEO Manish Sharma expects reforms in the union budget, saying that would drive consumption and improve the consumer demand.

"In order to realise the ‘Make in India’ vision, it is essential for the government to reduce basic customs duty on parts used in manufacturing of key components such as Motors and PCB which currently ranges from 7.5 -10 per cent. To give a perspective, reduction in custom duty on these parts, used in manufacture of PCB and motors which are further used for manufacturing Washing Machine, Refrigerator and AC will reduce input cost, allowing Indian manufacturers to be far more competitive," he said.

BSH Home Appliances India Managing Director and CEO Neeraj Bahl said Union Budget 2020 will focus of regaining consumer confidence, by reduction of personal tax, which in turn will help boost consumer demand and help the industry, which had witnessed a flat growth last year.

"We urge the government to bring in constructive policies to lend support and drive growth in the sector," he said adding that "the government should also consider reduction in GST rates for products like refrigerators and air conditioners, which are now evolving from being luxuries to necessities for our consumers".

Usha International CEO Dinesh Chhabra: "One of the key measures in the sector could be reduction of GST rates on electronic components and rationalization of the slabs for various categories of products. GST rate cuts on components would provide manufacturers with an incentive to expand production."