Consumer goods sector unhappy with Budget

New Delhi: This year's populist Budget has offered a two per cent cut on excise duty on the consumer durables industry. However, this may not be prove to be too beneficial.

The Finance Minister has admitted to a slowdown in the consumer goods/durables sector.

"I am forewarned there could be a slowing down as I see in consumer goods, consumer durables and therefore we are taking steps to stimulate the market," said Chidambaram.

Despite this admission, the Budget has very little for this troubled industry. The excise cut of 2 per cent is counterbalanced by an increase in abatement and adds up to just 1.3-1.5 per cent of real benefit. This would mean that a Rs 10,000 product would be cheaper only by Rs 130-150.

However, certain items such as refrigerators, water purifiers and set-top boxes have become cheaper.

Industry insiders have confessed to being disappointed with the Budget.

"We were hoping the government would look at policy initiatives which will support the development of component industry in India. Also, we were looking at certain rationalisation of duties on input raw material which should help the overall output cost. These are areas where we had expectations from, which is where we have been a bit disappointed," said LG India's Sales and Marketing Director, V Ramachandaran.

Meanwhile, the Finance Minister has expressed the hope that the relief in income tax slabs might leave the consumers with more money, hence boosting demand..

"We have left more money in the pockets of consumers," Chidambaram had said.

But the industry is obviously not impressed with this minute reduction and says that the benefit would not be passed on to the consumer.

Rather, players like LG, Samsung and Godrej hope to counter balance this marginal reduction with rising prices of inputs like steel and copper.

With the Budget washing away the hopes for this sector, companies are now banking on the summer to steam up their sales numbers.

With inputs from Vertika Kanaujia

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