Durables industry has heavy duty demands from Budget

Written by Ashish Sinha | New Delhi | Updated: Mar 13 2012, 07:41am hrs
Having faced its worst possible quarter that saw diminishing sales, the consumer durables industry now wants a reduction in various taxes, such as customs duty and special additional duty, and zero taxes on research & development to boost domestic production and spur consumer spending.

However, the consumer durables industry and the cable industry are at loggerheads over reduction in customs duty on imported set-top boxes.

Consumer durables players want the duty to be hiked to 10% to spur domestic production. However, DTH and cable operators want zero duty to boost digitisation as 95% of the boxes are imported.

According to Anirudh Dhoot, director, Videocon, & president, Consumer Electronics and Appliances Manufacturers Association (CEAMA), the last quarter of 2011 has

not been very fruitful for the consumer durables


First, the summer played a spoilsport and, then, frequent price rises due to commodity inflation took a huge toll on sales of mass products. Finally,

the depreciating rupee further increased prices, thereby keeping the consumers away.

He added: We expect the government to take certain important decisions, keeping in mind the middle-class aspirations, which will benefit the consumers majorly by bringing in the within reach factor.

CEAMA is an all-India body of organisations in the consumer electronics and durables sector.

According to experts, since the discretionary consumer spends went down significantly due to high inflation, the Budget should take corrective actions to spur spending.

The durables industry now wants CST rate to be reduced from 2% to 1% as its not creditable and there is just a cost for manufacturers that is passed on to the consumers.

The industry also wants doing away of customs duty on R&D items to promote the activity in India.

Customs duty relaxation should be allowed to units manufacturing energy efficient products. This will promote manufacturing of more energy efficient products in India, which could lead to more exports and revenue, Dhoot said.

CEAMA also wants relaxation in customs duty on parts, components, spares, raw materials, supporting machines, tools and dies for manufacturers who adopt non-ODS Technology in manufacturing of ozone friendly products.

CEAMA says the SAD levy of 4% for manufacturers on imports of goods should be abolished as it does not generate revenue for the government, but adds to the cumbersome process of claiming the refund from customs, which takes 9-12 months.

While CEAMA favours an increase in customs duty on set-top boxes to 10% from the current 5%, DTH and cable operators have demanded a zero-duty regime on STB import for at least next three years to encourage digitisation.