No change

New Delhi, March 2: Most consumer durables are unlikely to get cheaper despite finance minister P. Chidambaram making a 2 per cent cut in central value-added tax (cenvat) to boost demand.

Major consumer durable companies told The Telegraph that they were not planning to cut prices of products such as refrigerators, colour televisions, air-conditioners and washing machines.

They said the reduction proposed by the finance minister would give them a breather, but it was not sufficient to reduce prices since the industry has been deeply affected by a rise in input costs in the past couple of months.

“We welcome the relaxation, but there will be no major change in product pricing as there has been no major relief in duties,” said Moon B. Shin, managing director of LG Electronics India.

In his budget for 2008-09, Chidambaram proposed to cut cenvat to 14 per cent from 16 per cent, saying, “The manufacturing sector is the backbone of any economy. It is consumption that drives production and production that drives investment.”

V. Ramachandran, director (sales and marketing), LG Electronics, said, “The 2 per cent reduction in cenvat will prove to be a little beneficial for the industry. It will help offset the rise in raw material costs, so we can rule out any price increase at least in the medium-term.”

Ravinder Zutshi, deputy managing director of Samsung India, said, “The budget this time will leave the prices of products unchanged. The decision to absorb the cost of raw materials and holding any further increase in prices has nothing to do with the budget. It is the decision of companies who want this market to grow.”

Pranay Dhabhai, whole-time director and chief operating officer of Haier Appliances (India), said, “In the past few months, the input costs of raw materials had increased by about 10 per cent and we were planning to hike prices. But this cut in excise duty will surely reduce the planned price increase and as a consequence, the customer will stand to benefit.”

However, companies said the proposal to reduce duty on convergence products to 5 per cent from 10 per cent might bring about a reduction in the prices of MP3 players.

Secretary-general of the Consumer Electronics and Appliances Manufacturers Association Suresh Khanna said, “The direction of reducing the taxes is welcome but it is only a token relief. As the minister (Chidambaram) said that the industry was not doing very well, we were hoping that the taxes should have been brought down further.”