The Hindu Business Line : Durables majors happy with cut in peak customs duty

R.P. Khaitan, President, Consumer Electronics and Television Manufacturers Association (CETMA): The issue of inverted duty arising due to implementation of Free Trade Agreement (FTA) with Thailand has not been addressed in the Budget, though the same was mentioned in the Finance Minister's speech.

For example, the customs duty on colour TV, colour picture tube, refrigerator and air-conditioner on import from Thailand is 12.5 per cent now; this would come down to 6.25 per cent this year and to 0 per cent in 2006. But many of the inputs continue to be at the peak rate of customs duty of 15 per cent. This issue needs to be addressed urgently as it affects survival of the industry.

We welcome implementation of value added tax (VAT) for all States. However, CST and VAT are not compatible and there is no mention of road map abolition of CST in the speech. CETMA welcomes reduction of peak rate of customs duty from 20 per cent to 15 per cent and reduction in customs duties on basic metals, plastics and its inputs from 15 per cent to 10 per cent. We also welcome reduction of excise duty on air-conditioners from 24 per cent to 16 per cent."

Ravinder Zutshi, Director, Samsung India: It has been a positive Budget that went as per our expectations. We are happy that the Finance Minister has taken steps to ensure a level playing field and competitive domestic manufacturing in the electronics and technology sector. The reduction of peak customs duty from 20 per cent to 15 per cent is a step in the right direction.

The rationalisation of the inverted duty structure on raw materials and capital goods is an encouraging move. The reduction of excise duty on air-conditioners from 24 per cent to16 per cent is a welcome step as air-conditioners today are an essential part of people's home."

Rajeev Karwal, Managing Director & CEO, Electrolux India: The peak duty cut in customs was expected and is welcome. The excise duty and Cenvat reduction in air-conditioners, despite raising tremendous hopes, won't result in a price cut simply due to the lack of coherent manufacturing strategies followed by the Government earlier.

About 90 per cent of AC manufacturing was in fact taking place in zero per cent Cenvat States such as Himachal Pradesh, Uttaranchal, Assam, Jammu & Kashmir and the reduction of excise from 24 per cent to 16 per cent is in no way going to affect the locally manufactured ACs, which account for 90 per cent of the AC market. This excise duty and Cenvat may affect higher-end ACs where prices may drop from Rs 500 to Rs 1,500 depending upon the price points."

Salil Kapoor, Head of Marketing, LG Electronics India: Reduction in duties in ACs is a welcome gesture as it will lend scalability to non-exempted manufacturers who, due to excise-exempted area, found production unviable. It will give them the added impetus. Furthermore, Mr Chidambaram's announcement of reducing customs duty to nil on all IT products has been quite favourable providing the necessary boost to this fast developing sector."

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