Representational image. Photo credit: Reuters
With custom duty on imported refrigerators and washing machines doubled, consumer electronics and appliances market is preparing itself for an imminent price hike. To customers' relief though, manufacturers have decided to pass on the increase in costs till the festive season is over. Smartphone makers Xiaomi, Honor, OnePlus, Samsung and Asus have reportedly agreed not to hike prices till Diwali. White good manufacturers Panasonic, Haier, Bosch, Siemens and BSH Electronics also have decided not to hike prices till the festive season is over.
Companies are able to shield consumers from the price hike as they have readied their inventories ahead of the festive season months ago, as is the practice. While most of the smartphone companies have their manufacturing facilities in India, they still have to import components like capacitors, camera unit, fingerprint sensors and such which incur custom duty. Some companies even import completely build units appliances, like washing machines and refrigerators, which now attract 20 per cent custom duty instead of 10 per cent.
Last month, government hiked custom duty on imported electronics to check the sharp fall in rupee and widening current account deficit right before the onset of the festive season. On an average, sales during this time of the year account for one-fourth of the annual sales registered in consumer electronics segment. Companies are already expecting the fallout from Kerala floods to eat into sales numbers.
"The rupee depreciation has no doubt become a scary situation and a headache. Ideally, smartphone prices should have gone up by 10% but we have not only chosen to hold on to prices but even give offers and discounts to drive volume sales," P Sanjeev, vice president, sales, at Huawei & Honor Consumer Product was quoted as saying in a report by The Economic Times.
"We are here for the long term and hence ready to absorb some of these external factors. In fact, on the contrary there will be huge discounts on offer and any call on pricing will be taken after Diwali depending on exchange rate then," the report further quoted Asus India director, mobile product, Dinesh Sharma.
OnePlus and Xiaomi said that they will re-evaluate their pricing by the end of this year instead of burdening the consumers with a price hike right away, according to the report. The smartphone makers are even extending discounts and offers during the festive season via their own platforms as well as other channels.
Consumer appliance makers, on the other hand, are expecting a double-digit growth in sales this festive season despite the customs duty hike as most of them have chosen to absorb the impact and not to pass it on to consumers.
Edited by Vivek Punj