Budget 2022: Consumer durables sector expects focus on energy-efficiency

With India committing to net zero emissions by 2070, energy efficient appliances will contribute to this goal. While hoping that the government rationalises GST for air conditioners , the industry expects the government to announce incentives for energy efficient products.

 

“Lowering the GST slab for eco-friendly and energy efficient products further to 12 per cent will not just help to drive demand but also increase the adoption of sustainable appliances – in line with India’s commitment to climate goals,” said Kamal Nandi, Business Head and Executive Vice President, Godrej Appliances.

 

Over the last many years, Ministry of Power, through Bureau of Energy Efficiency (BEE), has initiated a number of energy efficiency initiatives in the areas of household lighting, and standards and labelling of appliances. The upfront cost of the energy efficiency appliances is on the higher side as compared to a lower star rate or a non-energy efficient product available in the market. However, energy efficient products reduce electricity consumption significantly, which not just helps in reviving the higher cost but also the cost of the appliances in just 5-10 years based on the usage.

 

Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG in India, said, “In last few years, the Government has introduced variety of measures such as reduced corporate tax rates, introduction of Production linked incentive schemes targeted towards certain categories to provide impetus to the durables sector. However, the demand may continue to get affected due to higher GST rates on certain finished white goods. Reducing current tax rates is likely to assist in balancing pricing pressures and in a way augmenting demand. Further, incentivizing manufacturing of eco-friendly and energy-efficient durable products could also be something that one could expect in this year’s Budget.”

 

According to Nikhil Mathur, Managing Director - India, GFK, echoes the sentiment. He argues that in the upcoming Budget, the industry is expecting an increased focus on energy-efficient products with reduced GST slabs. "Some reforms that is likely to boost manufacturing include reduction of corporate tax, expansion on Production Linked Incentives, rationalization of tax rates on products like Air conditioners, televisions, etc., The government’s commitment to make India a global manufacturing hub and ‘AtmaNirbhar’ with ‘Make in India’ vision will potentially help in increasing penetration and expansion of tech & durables market,” he said.

 

Climate change is for real. The government and the consumer durables industry has been adopting efficient energy norms for years. The industry is very positive about the upcoming Union Budget FY 2022-23 and hopes the government will give impetus to the economic progress of the country along with keeping end consumers in mind.

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