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Sector Focus : Consumer Durables

Consumer durables: State of the industry (2000-01)

Consumer durables: Tariffs

	Tariffs (per cent)
	Customs		Excise		Abatement rate
	2000-01	2001-02	2000-01	2001-02	2000-01	2001-02
B/W TVs	44.0	40.4	0.0	4.0	-	-
Colour TVs	44.0	40.4	16.0	16.0	30.0	35.0
Refrigerators	44.0	40.4	16.0	16.0	40.0	40.0
Room ACs	44.0	40.4	32.0	32.0	40.0	40.0
Washing machines	44.0	40.4	16.0	16.0	40.0	40.0
B/W picture tubes	32.6	30.0	16.0	16.0	-	-
Colour picture tube	44.0	40.4	16.0	16.0	-	-
Components for audio systems and CTVs	32.6	30.0	16.0	16.0	-	-
Components for washing machines	44.0	40.4	16.0	16.0	-	-
Compressors	44.0	40.4	16.0	16.0	-	-
CR steel sheets	44.0	40.4	16.0	16.0	-	-
Polymers (ABS/HIPS)	44.0	40.4	16.0	16.0	-	-

ABS: Acrylonitrile butadiene styrene; HIPS: High impact polystyrene.

Source: CRIS INFAC

Televisions

• In 2000, demand for colour televisions is estimated to have declined by 2 per cent, as compared with that in 1999. Demand for CTVs was low due to the preponement of CTV purchases in 1999-2000, due to the Cricket World Cup.
• In 2000, demand for B/W televisions is estimated to have declined by 15 per cent, as compared with that in 1999.
• Prices of CTVs and B/W televisions are expected to decline by 5-8 per cent.

Other consumer durables

• Demand for room air conditioners is estimated to increase by 22 per cent, as compared with that in 1999-2000. The growth in demand would be largely due to attractive pricing and strong consumer financing.
• Demand for washing machines is estimated to decline by 2 to 6 per cent to 1.1 million units, as compared with that in 1999-2000. The decline in demand would be despite a decline in prices.
• Demand for refrigerators is estimated to be relatively unchanged at 2.7 million units.

Consumer durables: Budget impact

Impact factors

Company name	Impact	Impact factors
Amtrex	neut	D
(18.95, 19.00)
BPL Ltd.	neg	A, B, C, D, E
(124.50, 129.25)
Carrier Aircon	neut	D, E
(86.50, 89.20)
Philips Ltd.	neg	A, B, C, E
(75.70, 77.50)
Videocon International Ltd.	neg	A, B, C, E
(41.35, 12.05)
Whirlpool	neut	D, E
(22.30, 22.90)

Note:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
pos= positive neg= negative neut= neutral

Source: CRIS INFAC

A: Prices of domestic colour television (CTV) are expected to be under pressure given that television imports are expected to be brought under the OGL from April 2001, under the WTO agreement. (At a customs duty of 40.4 per cent, competition is expected due to imports.) This is expected to have a negative impact on margins of domestic manufacturers, in spite of the expected increase in volumes due to lower prices. The marginal increase in the abatement rate on excise duty is not expected to have any significant impact.

B: The levying of a countervailing duty, based on the maximum retail price (MRP), on imports of consumer goods is expected to benefit domestic producers.

C: The incidence of a 4 per cent excise duty (without cenvat credit) on B/W televisions is expected to have a negative impact on the demand for black and white televisions (B/W TVs), as it would further reduce the price differential between B/W TVs and CTVs. This is expected to have a negative impact on producers such as BPL and Videocon, who have a significant market share in B/W TVs.

D: The marginal reduction in the customs duty on air conditioners, washing machines and refrigerators is not expected to have a significant impact.

E: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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