Consumer durables: Pre-Budget Sectoral Analysis

The growth prospects of the consumer durable industry continue to remain promising given the low penetration level and growing per-capita income. But with competition increasing at a faster rate, will manufacturers be able to grow profitably? Read more

Industry Wish List

	Increase in abatement on watches to 40% and reduction in customs duty on key raw materials. Exemption of excise duty on watches and clocks of retail price not exceeding Rs 500 per piece.
	Excise duty on B&W TV set should be based on MRP with an abatement of 40%.
	There should be customs duty differential between CTV, colour picture tube and colour glass parts to encourage value addition.

Budget over the years

Budget 2001-02	Budget 2002-03	Budget 2003-04

No significant developments.	Thrust in rural electrification and road connectivity. Peak customs duty on raw materials lowered to 35% from 40%. Excise duty on watches below Rs 500 per piece increased. Excise duty on B&W TV increased to 8% from 4%. Administered interest rates lowered by 50 basis points.	Significant thrust on infrastructure development and continuation of rural electrification projects 04 Hike in standard deduction, removal of surcharge and hike in section 80L benefits Peak customs duty reduced to 25% from 30%. Excise duty on air conditioners reduced by 8% from 32% to 24%

Key Positives

	Penetration of durables continues to remain sluggish when compared to other developing economies.
	Rising income levels, consumption patterns and urbanization are some of the key factors that would result in higher growth in volumes in the long run.
	Easy availability of finance has stimulated consumers to buy durables.
	With the government focusing on rural electrification programme, the consumer electronic manufacturers stand to benefit over a period of time.

Key Negatives

	Higher import duty on key raw materials (ex: colour picture tubes) has been a cause of concern.
	Exchange schemes and pricing-play by some manufacturers have had a negative impact on top players. Prices of durables and electronics have been on the decline over the last three years
	Volatile performance of the agricultural sector has had a negative impact on demand. The sector's performance is highly dependent on monsoon and reforms, which has failed often.
	Threats of cheaper imports from China and other South East Asian countries, both for electronics and watches.

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