White goods makers will offer items at discounted rates till December 31
If you are planning to purchase electrical appliances, you should do so before the New Year. White goods makers will be initiating another price hike for products from January onwards.
Sources told Moneycontrol that companies will be increasing prices of TVs, refrigerators, washing machines and air conditioners by 7-10 percent from next year due to a rise in input prices. The steepest hike could be in ACs.
Appliance makers have been facing pressure from rising manufacturing cost. This is due to the rupee depreciating against the dollar, high tax rates as well as fuel prices staying high.
Freight costs are estimated to be around 10-15 percent of overall costs for consumer durable companies. Any hike in oil prices leads to a subsequent increase in transport costs, pushing up overall costs.
“We have been holding prices till the year ends. From January 1, we will no longer be able to offer products at lower rates,” said the managing director of a global appliance maker. He added that the industry hopes to exhaust the existing inventory by December-end.AC prices to see biggest price increase
Among the different product categories, AC prices are expected to see the maximum increase from 2019 onwards. Due to unsold inventory and poor sales in summer, companies were unable to increase prices for products.
The GST Council also maintained the Good & Services Tax (GST) at 28 percent despite requests from companies to pare it down to 18 percent. GST on products like TVs (up to 27 inches), refrigerators, food processors and washing machines has been cut to 18 percent. While there are talks of the same for AC being brought down to 18 percent, it is not clear by when this will be implemented.Impact of customs dutyIn September, customs duty was hiked to 20 percent from 10 percent for certain product categories like air conditioners, washing machines (up to 10 kg) and refrigerators. Due to the onset of the festive season during that time, companies did not raise prices.“The idea was to hold on till Diwali and then increase rates. But festive sales were lower-than-expected, so we decided to postpone the price increases to 2019,” said the president (sales) of a mid-sized appliance maker.