Following the unprecedented setback caused by the global pandemic in 2020 and witnessing the second wave of the COVID-19 during Q1, the year 2021 remained one of the most promising years for the entire economy showing green shoots in the second half of the year.
The upcoming quarters project a promising picture for industries across sectors including consumer durables. Being on a threshold to welcome a new year, we are optimistic towards collectively channelizing the growth. The intent from the GoI is to reduce the compliance burden and an initiative like Production-linked Incentive (PLI) scheme is set to propel the economy in the coming years.
Against this backdrop, our efforts towards revamping the growth of consumer durables and the electronics industry are playing a key role in economic recovery. We expect the Union Budget FY 2022 -23 to see reforms that accelerate growth across industries channelized by consumer demand.
We are hopeful that the Government will examine items that would stimulate domestic manufacturing in the country during the upcoming Budget session, and can expect an increase in import tariffs on audio products (CBU Products).
Audio technology is an emerging segment and with new players foraying into the business, the demand and possibilities to meet them are at an all-time high. We expect some tariff barriers on audio to encourage domestic manufacturing.
Additionally, the rationalization of GST would play another crucial point of discussion during the Budget. We would further encourage the Government to rationalize GST on certain consumer durables such as Air Conditioners (ACs) and Televisions (TVs). Consumers are preferring products that offer value propositions, and notably, these products are no longer considered ‘luxury’ as they have become common and essential household items.
Lowering the GST slab to 18 percent from the present 28 percent would help offset the price pressure, boost affordability, thus spur the penetration level of ACs (Split and Window) in the country.
Moreover, the energy efficiency of air-conditioners has steadily increased and they now offer added features such as air purification, which is an important feature in urban markets.
Similarly, while TV screens above 105 cm are considered to be in the premium category and has actually become the most sought after model now, we hope the Government reduces the GST on LED screens (above 105 cm) to 18 percent from the current 28 percent, as a step to strengthen our efforts towards making premium technology products accessible to potential customers, who refrain from upgrading due to higher cost of adoption. Hence, cutting the GST rate for premium screens by one slab will be a progressive step towards democratizing premium technology.
While the government has already approved investments under Production Linked Incentive (PLI) scheme as a step towards making India a global manufacturing hub and increasing the capabilities for “Aatmanirbhar Bharat”, we would urge the Government to review the export incentive for air conditioners under RoDTEP scheme and consider raising it. This will encourage exports and ease up supply chain challenges that have led to the increase in logistical cost by 10 times as compared to 2020.
Pandemic had managed to push up the awareness and penetration around insurance to some extent. From the end consumers' perspective, reduction of GST on insurance premiums and addressing double taxation would provide relief for people that allow them to save more and increase the purchasing power.
We are positive about the Union Budget FY 2022-23 and expect a balanced and thought-through allocation, which not only gives impetus to the economic progress of the country, but also enables direct benefits to end consumers.
(Manish Sharma, CEO, Panasonic India, and South Asia)