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The recently announced Indian budget for 2008–2009 has little to offer appliance companies. A 2% reduction on central excise duty, from 16% to 14%, is not much to cheer about. Durable manufacturers were expecting the excise duty to decline to at least 12%. The direct-to-home television industry, however, is celebrating: Customs duty on set-top boxes has been waived, which will give a boost to the industry.
Appliance makers have been rooting for a substantial reduction in excise duty, but a 2% reduction is not expected to benefit the industry significantly and is unlikely to result in lower appliance prices for consumers. The price of steel, which accounts for 30% of the cost to manufacture air-conditioners and refrigerators, has increased 12–15% in the past several months.
While not affecting the appliances industry directly, the budget’s emphasis on rural development, aimed at enhancing living standards among the rural population and at higher availability of disposable incomes, should give a boost to retail sales of consumer appliances. Moreover, with the threshold limit of exemption for personal income tax rising to Rs 150,000 (approximately US$3750), consumption of appliances is expected to get a fillip.
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