The government has proposed slashing the GST rate on air conditioners, TVs above 32 inches as well as dishwashers to 18% from 28% earlier bringing them on a par with other white goods such as refrigerators and washing machines, sources said. The latter two categories are currently taxed at 18% in terms of GST.
The proposal to provide a GST rate relief to ACs, TVs (above 32 inches) and dishwashers will come up at the crucial GST Council Meeting, which begins Wednesday, sources said.
Industry executives said that if formalised, the rate rejig could go a long to give a boost to consumption during the crucial Dussehra-Diwali period. Over a third of durable sales happen during this period for most players.
Festive season demand outlook
The government proposes to implement the new GST rates by September 22, but the industry may take a couple of weeks more to roll out inventory with revised pricing in time for Dussehra, which will be celebrated on October 2. Diwali will be celebrated in the middle of October. “Most consumers are waiting for the new pricing to reflect on products before they can begin buying,” Kanwal Jeet Jawa, chairman & MD, Daikin Airconditioning India, said.
“There is a short-term lull in the marketplace owing to the anticipation of a GST rate cut. But this will dissipate once the inventory with revised pricing hits stores,” NS Satish, President, Haier Appliances India, said.
Industry bets on sales rebound
The importance of the festive season this year is even more as the April-June quarter, which is a big season for cooling products was weak owing to unseasonal rains. Companies are counting on the second half of the current fiscal, led by the proposed GST rate rationalisation to drive up demand and sales, experts said. “We are hoping for an improvement of at least 10-15% in terms of sales versus last year with the likely GST rate cuts in place,”; Nilesh Gupta, director, Vijay Sales, a consumer durables retailer, said.
Some executives believe that pent-up demand may drive up sales growth even higher given that buyer queries have been muted so far. Conversations with dealers and retailers reveal that buyer queries are down by at least 50-60% in states such as Maharashtra, Goa, Karnataka and Kerala even as the Ganesh Chathurthi and Onam festivals are currently underway. “Most brands are hoping to cover ground during Dussehra-Diwali when inventory with revised pricing will be in retail outlets,” Gupta added.