Budget woes: Customs duty hike may make ACs costlier, says industry

Express News Service
NEW DELHI: Finance Minister Nirmala Sitharaman has proposed an increase in customs duty on items that included mobile phone parts and compressors.

Industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Kamal Nandi said, “The customs duty revision for the compressors, used in refrigeration and air conditioning, from 12.5% to 15% will promote indigenous manufacturing… There have been increases in import duties on motors and PCBs as well.”

He, however, added, “these are good for the medium and long term but will impact price adversely in short term due to insufficient output capacities.”

All compressors used in domestic manufacturing of ACs and refrigerators are imported from overseas. Hence a customs duty hike may impact prices of finished goods.

Manufacturers such as Panasonic, Blue Star and LG said that they would bear the impact instead of passing it on to the consumers.

The Union Budget 2021 also announced a 2.5% customs duty on certain mobile phone parts and power banks for greater domestic value addition.

Counterpoint Research Associate Director Tarun Pathak said there might be an increase in prices for short term or a modest increase. 

Sitharaman also proposed to hike customs duty on specific auto parts like ignition wiring sets, safety glass, parts of signaling equipment, from 7.5-10% to 15%. The parts would also attract agri infrastructure and development cess at 5%.