Budget 2015: Consumer goods companies bet big on Make in India for growth

The consumer durable industry is betting big on Prime Minister Narendra Modi’s ‘Make in India’ campaign in the upcoming budget 2015. The industry, which is pegged at Rs 45,000 crore in FY14, is expecting the government to focus on developing infrastructural sector, which in turn will cut down on the high input cost that most companies bear.

“Government’s emphasis on improving residential and industrial infrastructure coupled with focus to make India a global manufacturing hub is likely to fuel the dynamic growth of this industry,” said Krishan Sachdev, managing director, Carrier Midea India Pvt. Ltd.

Focus on Make in India

According to Sachdev, the budget should focus on announcing major policy reforms that will boost the manufacturing sector in India.

An industry expert also noted, “The Centre must take decisive measures to make manufacturing in India more competitive and attractive in order to enable industry players domestically manufacture consumer products such as washing machine, air conditioner and others. Manufacturing domestically will not just slash our input costs but is more economically viable than importing finished goods from other countries”.

Slash excise duty

“Recent recall of excise duty cut has certainly put strain on the industry and consequently some industry players are compelled to hike price which is impacting the performance,” said Sachdev.

In a report, Manish Sharma, managing director of Panasonic India and president of Consumer Electronics and Appliances Manufacturers Association (CEAMA), shared a similar sentiment and added, “We strongly propose a reduction in the excise duty to give an overall boost to the sector”.

It should be noted that the Centre recently brought back excise duty on consumer products, which has adversely impacted the sales of the consumer goods companies as it dented the consumer sentiment in the market.

Implement GST immediately

Sachdev believed that introduction of GST and a clear policy on ease of doing business in India are some steps which will fuel the economic growth. “Additionally, falling interest rates and lower commodity prices should increase disposable income for consumers which will push the consumer durable segment further,” he stated.

Sharma of CEAMA too reiterated “Once fully implemented, GST will create a single, unified Indian market and will diminish the multiple layers of indirect taxation that prevails at present.”

Our view

According to market estimates, the consumer durable industry is expected to grow by 20% year on year. While the industry is on growth track, the rate of growth can certainly be doubled, if correct policy reforms are announced in the upcoming budget. The industry can certainly grow by multifold if the government focuses on making India a manufacturing hub in the global market.

Image: Indiatimes.com