The Telegraph
Since 1st March, 1999
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White goods firms chill price-cut hopes

New Delhi, March 11: White goods product prices are not likely to fall, dashing the hopes of consumers who had put off purchases till after the budget.

None of the leading white-goods makers are planning to cut prices.

“We have already rationalised prices making them 5-7 per cent lower than last year’s price because of superior technology and the effectiveness of the total value chain,” Ashok Bhasin, Whirlpool India’s vice president (marketing), told The Telegraph.

“There was no major announcement in the budget which could impact prices of refrigerators and washing machines. So, we do not intend to revise prices,” said another Whirlpool India official.

Finance minister Jaswant Singh had proposed to reduce the excise duty on air-conditioners from 32 per cent to 24 per cent, implying an 8 per cent cut.

However, companies like LG and Hitachi said prices of ACs won’t come down by more than 3.6 per cent.

Senior LG executive Bijo K. George said, “With the abatement on the maximum retail price of products coming down from 40 per cent to 35 per cent, the net excise will be reduced from 19.2 per cent to 15.6 per cent which only translates into a 3.6 per cent reduction.”

Abatement of excise is a special tax break extended to companies under which the excise duty is calculated on the maximum retail price less 40 per cent. In the current budget, the excise abatement benefit has been reduced to 35 per cent, thereby nullifying the gains on the excise duty cut.

“We are operating at low prices but will still re-work our prices a little more. For example, we propose to reduce our price on the 8.5 tonne ductable air-conditioner used for commercial purposes from Rs 1,45,000 to Rs 1,35,000. But the cost cutting might not touch all models or all segments,” George added.

Samsung India director R Zutshi said: “The excise duty reduction in ACs from 32 per cent to 24 per cent to some extent have been negated by the reduction in the abatement on ACs. Thus, the net impact of the excise duty reduction is very minimal. The 5 per cent customs duty reduction on colour TV components will have little impact on colour TV prices since most firms use localised components.”

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