Tax relief fillip to the consumer durables sector

The Union Budget 2010-2011 is a progressive budget with a special focus on infrastructure and rural growth. With an emphasis on high GDP growth and laying down a roadmap for fiscal consolidation, the government is putting things in perspective when it comes to allocation of funds.

Aiming at reducing the fiscal deficit of 5.5% and through a major push towards infrastructure, rural and urban development, the government has set aggressive growth and development plans for the year.

We are thankful to the policy makers who have created an encouraging environment of continuous economic growth and development by steadily introducing reforms and measures. Such supportive measures have helped the consumer durable industry in achieving high growth rate. The breeze of reforms has continued to be as impressive as in the past. 

The budget is essentially growth driven with good signals for the overall industry. The government has stood by its plans in the positive development of the overall economy with a thrust on the key growth engines for India i.e. the rural and education sector. The budget will have the following effects on the consumer durables industry.

With 2% increase in excise duty, price hike is imminent in near future.

Benign on the taxation front, the government has increased the personal income tax limit; this will boost the spending capability of Indian consumers. The economic revival, flourishing job industry and increasing disposable incomes will certainly increase the demand for products across sectors in India. This will also lead to enhancement of the consumer lifestyle as they will now have more money to spend.

The 5% deduction (existing 10%) in excise duty on the metal component (magnetron) used in manufacturing of microwave ovens is a significant step to promote the concept of healthy cooking in India and bringing innovations to Indian kitchens.

To promote in-house research and development the government has announced an increase in the R&D deduction of tax limit from150% to 200%. We welcome this step as this will lead to better and innovative products.

Increase in excise duty on petrol by 1% and crude oil by 5% will have an impact on the costs involved in freight. Thus, an increase in the price of the product for the end-consumer.

Special additional duty on mobile phones has been rolled back. This will benefit the mobile companies which import packaged mobile phones as it will now eliminate the long fund blockage process.

Abolishment of 2% excise duty on mobile phone accessories is also encouraging for consumers.

We look forward for the implementation of GST within the stipulated timeframe.