Union Budget 2021 Expectations for Consumer electronics industry: The government continues to show commitment towards introducing long-due reforms leading to ‘Ease of Doing Business,’ making India ‘AtmaNirbhar’ by promoting ‘Make in India’ initiatives aggressively.
Union Budget 2021-22 Expectations for consumer electronics industry: Air conditioners and televisions are no longer luxury items; these have become essential household items, says Manish Sharma, president & CEO, Panasonic India & South Asia. “During the upcoming Budget session, the government should consider rationalisation of tax rates on such consumer durable electronic items. The Union Budget should offer incentives for manufacturers to produce energy-efficient products which will be in line with the government’s sustainability agenda,” he says while discussing the pre-Budget expectations with Sudhir Chowdhary. Excerpts:
As one of the leading brands in the appliance and consumer electronics (ACE) industry, how do you see the Union Budget 2021 contributing to the economic recovery?
India’s lockdown in Q1 of FY21 did have a significant impact on the GDP which contracted an unprecedented 23.9%. However, over the last few months, macroeconomic indicators are showing signs of recovery. RBI also predicts that the economic shrinkage is over and GDP will grow in the next few quarters. The government continues to show commitment towards introducing long-due reforms leading to ‘Ease of Doing Business,’ making India ‘AtmaNirbhar’ by promoting ‘Make in India’ initiatives aggressively.
With this backdrop, we strongly believe that the consumer durables and electronics industry, which saw positive festive season last year, has the potential to help our economy recover faster. And, our expectation from the Union Budget 2021 is to see reforms that drive consumption and improve consumer demand.
What are the areas you would want the government to address in the Budget?
During the upcoming Budget session, I would urge the government to consider rationalisation of tax rates on certain consumer durable electronics such as air conditioners (ACs) and television (TVs). These are no longer ‘luxury’ items and have become common and essential household. The energy efficiency of air-conditioners has steadily increased and they now offer added features such as air-purification which is important in urban areas. Lowering the tax slab to 18% from 28% would help offset the price pressure and spur demand for both air conditioner (Split and Window) and television (above 68 cm), thereby improving affordability among customers, attracting investments in component manufacturing, and help in penetrating deeper into the market, especially for the AC category.
What would be the manufacturers’ expectations from the Budget?
For manufacturers, reforms such as the reduction of corporate tax and introduction of the Production Linked Incentive (PLI) scheme were welcomed and it displays the government’s intent to promote healthy backward integration and provide impetus to domestic manufacturing while elevating India’s position as a global manufacturing champion. To ease supply chain challenges, I would urge the government to consider the ‘One Nation, One Permit, One Tax’ system for a seamless and efficient road transport experience.
The continuous tightening of the energy norms, upping the R&D and material cost, put upward pressure on prices for energy-efficient products, further dampening the consumer sentiments. Lowering the GST tax slabs for eco-friendly and energy-efficient products such as ACs, refrigerators, washing machines, etc., will drive demand and increase the adoption of sustainable appliances by consumers. The Budget should additionally offer incentives for manufacturers to produce these energy-efficient products which will be in line with the government’s sustainability agenda.
What do you expect for consumers?
From a consumer perspective, increasing the deduction under Section 80C to Rs 3 lakh from current levels of Rs 1.5 lakh will help reduce the tax burden giving more spending power to people. We are highly optimistic about the upcoming Union Budget and expect it to usher in a balanced combination of reforms and regulations, which will, in turn, boost the ACE industry, contributing positively to India’s growth story.