Consumer electronic companies pin their hopes on the festive season

Our Marketing Bureau in New Delhi

After registering a paltry three-four per cent growth in September, the consumer electronics industry is banking on the festive season to help it achieve a 10 per cent growth over the next three months and end the year with an overall growth of five per cent.

Pinning their hopes on the festive season, colour television manufacturers are putting in place aggressive plans to woo customers with incentives and promotions. According to Mr Rajeev Karwal, president, Consumer Electronics & TV manufacturers Association, (CETMA), ‘‘the signs of revival in July and August which witnessed 18 per cent and 21 per cent volume growth, respectively, over corresponding months of the previous year, have been belied in September, with industry registering three-four per cent volume growth and around four per cent growth in value terms.’’ This may have been a fallout of the September 11 New York attacks and ‘shraadh’ during which purchases traditionally fall.

The durables industry has faced the highest price erosion, as high as 18-19 per cent in some segments. While cost erosion has been six-seven per cent, price erosion across product categories has on an average been 10 per cent. As a result, over the last five to six quarters, all major manufacturers have seen their margins fall substantially by around three-four per cent. That, combined with the general recession in demand is causing concern to the manufacturers, who are practically fighting with their backs to the wall.

In efforts to beat the sluggish market conditions and bring the industry together, CETMA has set up a number of special groups to tackle the market in a concerted manner. These groups include one on purchases that will attempt to set standards of costing and share best practices among member- companies. Other groups include a code of conduct group to ensure fair business practices, customs and excise group, DTH and digital TV and an export group to look into the issues inhibiting export growth. Also, managing costs of both products and organisations, managing trade relationships and the supply chain also form part of the initiatives already put in place by CETMA.

According to CETMA, the government needs to urgently address issues inhibiting domestic industry growth like the 35 per cent abatement on CTVs against 40 per cent on other durables, customs duty on CPT, which at 35 per cent is equal to the duty on CTVs and high level of sales tax that results in mushrooming of the grey market.

Mr Karwal said right policy initiatives by the government like allowing smooth transition to vat and removing anomalies in the duty structure will also boost industry growth. ‘‘On the pretext of rationalisation, sales tax has gone up to 12 per cent or more from the earlier four-six per cent. The government has also imposed four per cent excise duty non-modvatable on B&W TVs, which has increased their cost and retarded demand,’’ he said.