As we step into a new era of younger population mix increasing and per-capita income growing at a faster rate in light of the growing contribution of the services sector to the GDP, demand prospects are promising. But will players be able to sustain profitability with threat from imports growing day-by-day?
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Increase in abatement on watches to 40% and reduction in customs duty on key raw materials. Exemption of excise duty on watches and clocks of retail price not exceeding Rs 500 per piece. |
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Excise duty on B&W TV set should be based on MRP with an abatement of 40%. |
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There should be customs duty differential between CTV, colour picture tube and colour glass parts to encourage value addition. |
| Budget 2002-03 |
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Budget 2003-04 |
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Budget 2004-05 |
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Thrust in rural electrification and road connectivity.
Peak customs duty on raw materials lowered to 35% from 40%.
Excise duty on watches below Rs 500 per piece increased.
Excise duty on B&W TV increased to 8% from 4%.
Administered interest rates lowered by 50 basis points. |
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Significant thrust on infrastructure development and continuation of rural electrification projects 04
Hike in standard deduction, removal of surcharge and hike in section 80L benefits
Peak customs duty reduced to 25% from 30%.
Excise duty on air conditioners reduced by 8% from 32% to 24% |
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Excise duty on clocks, watches of retail sales prices upto Rs 500 per piece is being raised from 8% and 16%. Parts of clocks, watches of retail price upto Rs 500 per piece will now be liable to tariff with an effective tax rate of 16%.
Excise duty on monochrome television has been raised from 8% to 16%. CTV will attract a uniform excise duty of 16%.
Excise duty on imitation jewellery has been raised from 8% to 16%.
Increased spending on infrastructure and maintaining economic growth momentum from a long-term perspective. |
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[Read more on Budget 2004-05] |
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| Key Positives |
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Yet to catch up: Penetration of durables continues to remain sluggish when compared to other developing economies.
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The India story: Rising income levels, consumption patterns and urbanization are some of the key factors that would result in higher growth in volumes in the long run.
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Better affordability: Easy availability of finance has stimulated consumers to buy durables.
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Rural unexploited: With the government focusing on rural electrification programme, the consumer electronic manufacturers stand to benefit over a period of time. But this has been slow to come by. | |
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| Key Negatives |
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Mismatch in duties: Higher import duty on key raw materials (ex: colour picture tubes) has been a cause of concern.
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Fiercely competitive: Exchange schemes and pricing-play by some manufacturers have had a negative impact on top players. Prices of durables and electronics have been on the decline over the last three years
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Growth is slow: Volatile performance of the agricultural sector has had a negative impact on demand. The sector's performance is highly dependent on monsoon and reforms, which has failed often.
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Imports Vs Indian: Threats of cheaper imports from China and other South East Asian countries, both for electronics and watches. | |
Budget 2005-06: Complete Coverage
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