IFMA Draws Up Plan To Contain Fakes

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New Delhi, Sept 9: The Indian Fan Manufacturers Association (IFMA) has drawn up a plan of action to contain the spurious/duplicates market, which has grown to alarming proportions. At the same time, it is seeking union government’s intervention to protect the interests of the organised players by giving them relief in excise duties and measures to reduce high production costs.

Said IFMA president Anil Agarwal, “The spurious/duplicates market has reached gigantic proportions to take up almost 55 to 60 per cent of the total market. This is killing the sales of branded products, since we cannot hope to match their prices. Which is why we are launching these initiatives to educate the consumers on the harm such sales actually do to them.”

IFMA has made several representations to the Govt to reduce excise duty on electric fans, which is an item of mass consumption and the second most important durable after a cycle in rural areas.

Yet, while cycles are exempted from excise, fans attract an excise duty as high as 16 per cent. Sales tax is several states is also very high, in the range of 8 to 14 per cent and IFMA is seeking bringing it down to a uniform level of 4 to 5 per cent.

The high duties only help to increase the price gap between the organised and unorganised sectors: almost 40-50 per cent, which helps this segment to flourish. As a result the volumes of the organised sector, which pays duties, is shrinking.

The Rs 1,200 crore organised fan industry has taken a bad hit, waging a twin battle against a thriving fakes industry and the steep increase in prices of most inputs like steel, copper, aluminium.

Said Mr Agarwal, “As a result of the hikes, production costs have gone up by around 15 per cent and companies have been able to pass on merely 5 per cent, being forced to absorb the rest.”

As a result, even though exports are going up, the profit margins are almost nil. “Considering the highly competitive global market situation and uncertain rupee-dollar parity, it has further brought down the retention per fan for exporters to very low levels. While input costs have gone up dramatically, the corresponding export prices have not increased, resulting in either loss of orders or negligible margins,” said IFMA.