While presenting the budget, Finance Minister Nirmala Sitharaman had proposed to hike the basic customs duty to 12.5 per cent from 10 per cent on compressor of refrigerator and air conditioner. In a residential AC, compressor and motor, which account for around 30 per cent of the price are imported, while sheet metal, coils and other are sourced locally.
NEW DELHI: Air-conditioning sales season is about to begin and the sector is preparing for a hike of up to 5 per cent, in the midst of the combined impact of the hike of customs duties on compressors and increased logistics costs due to the Coronavirus outbreak in China , the main supplier.Amid Coronavirus scare, some manufacturers expect 2020 to be a difficult year for the industry as they are going to airlift components from China, Thailand and Malaysia such as controllers, compressors and other materials.
According to some makers, the crisis "unfortunately" has come at a critical time, when April-June season is knocking, during which the industry accounts around 40 to 45 per cent sale of residential air conditioners.
"There is a shortage due to Coronavirus and we are airlifting the essential components from China in order to keep up demand. Customs duties on compressors and others are also rising,"said Blue StarNSE -2.16 percent Managing Director B Thiagarajan.
Air conditioning and industrial refrigeration service, Blue Star has already raised prices on different products by 3 to 5 per cent.
"This is not only because of Coronavirus. We have to lift some parts. Custom duty and ocean freight are growing too," he said.
According to Daikin India MD & CEO KJ Jawa, most of the Indian companies are "strongly dependent" on China not only for compressors but also for other components as controllers etc.
I expect the prices to increase with immediate effect by 3 to 5 per cent. If the condition doesn't change,it could go further up.Most of the people are importing from Thailand or Malaysia," said Jawa adding that Daikin has already increased price, effective from March and has plans to review it further if the condition does not improve.
That's unfortunate but what else can one do about it, "he said, adding" this will definitely affect the industry's short-term revenue and profitability.
In presenting the budget, Finance Minister Nirmala Sitharaman suggested raising the basic customs duty from 10 per cent to 12.5 per cent on refrigerator compressor and air conditioner.
Compressor and motor are imported into a residential AC, which accounts for about 30 percent of the amount, while sheet.
Voltas, a pioneer in the market, is also revisiting its costs, as it also feels the heat of supply disruption.
"There might be a shortage in the short term, so people may be searching for some opportunity to increase the price.In addition to the duties some of the components have also increased.Putting these items together will have some effect on pricing, and the industry is looking to increase it, "said Pradeep Bakshi, Voltas MD & CEO.
We will also need to look at our pricing again. We are still estimating exactly what kind of effect will happen, but there will definitely be some rise, "he said adding" it could happen around 2-3 per cent. Unless the raw material were further delayed than it will surely be more.'
However, on being asked that as whether it would impact the sales, Bakshi said that the hike would be around Rs 700 and this would not deter the customers to buy AC in summers.
Godrej Appliances AVP, Product Group Head-Air Conditioners Santosh Salian said "the rise will be 3 to 5 per cent above all for end-customers."
Unit production in China is greatly delayed and the entire timetable is interrupted due to Coronavirus, leading to an rise in ocean freight charges due to the difficult shipping situations arising from the outbreak.
If a change happens in the plan, you did not receive container at the same time. There is a peak load of container demand, this will happen and it will drive the ocean freight costs higher, "Salian said.
PanasonicNSE -0.34 percent India President & CEO Manish Sharma said the company is also tracking the situation and might consider airlifting to maintain inventory level for the essential components.
According to him, there is sufficient inventory for February and ..
Read more at:
https://economictimes.indiatimes.com/industry/cons-products/durables/ac-prices-to-go-up-by-5-per-cent-due-to-customs-duty-hike-rise-in-logistics-cost-amid-coronavirus-scare/articleshow/74266216.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
NEW DELHI: Air-conditioning sales season is about to begin and the sector is preparing for a hike of up to 5 per cent, in the midst of the combined impact of the hike of customs duties on compressors and increased logistics costs due to the Coronavirus outbreak in China , the main supplier.Amid Coronavirus scare, some manufacturers expect 2020 to be a difficult year for the industry as they are going to airlift components from China, Thailand and Malaysia such as controllers, compressors and other materials.
According to some makers, the crisis "unfortunately" has come at a critical time, when April-June season is knocking, during which the industry accounts around 40 to 45 per cent sale of residential air conditioners.
"There is a shortage due to Coronavirus and we are airlifting the essential components from China in order to keep up demand. Customs duties on compressors and others are also rising,"said Blue StarNSE -2.16 percent Managing Director B Thiagarajan.
Air conditioning and industrial refrigeration service, Blue Star has already raised prices on different products by 3 to 5 per cent.
"This is not only because of Coronavirus. We have to lift some parts. Custom duty and ocean freight are growing too," he said.
According to Daikin India MD & CEO KJ Jawa, most of the Indian companies are "strongly dependent" on China not only for compressors but also for other components as controllers etc.
I expect the prices to increase with immediate effect by 3 to 5 per cent. If the condition doesn't change,it could go further up.Most of the people are importing from Thailand or Malaysia," said Jawa adding that Daikin has already increased price, effective from March and has plans to review it further if the condition does not improve.
That's unfortunate but what else can one do about it, "he said, adding" this will definitely affect the industry's short-term revenue and profitability.
In presenting the budget, Finance Minister Nirmala Sitharaman suggested raising the basic customs duty from 10 per cent to 12.5 per cent on refrigerator compressor and air conditioner.
Compressor and motor are imported into a residential AC, which accounts for about 30 percent of the amount, while sheet.
Voltas, a pioneer in the market, is also revisiting its costs, as it also feels the heat of supply disruption.
"There might be a shortage in the short term, so people may be searching for some opportunity to increase the price.In addition to the duties some of the components have also increased.Putting these items together will have some effect on pricing, and the industry is looking to increase it, "said Pradeep Bakshi, Voltas MD & CEO.
We will also need to look at our pricing again. We are still estimating exactly what kind of effect will happen, but there will definitely be some rise, "he said adding" it could happen around 2-3 per cent. Unless the raw material were further delayed than it will surely be more.'
However, on being asked that as whether it would impact the sales, Bakshi said that the hike would be around Rs 700 and this would not deter the customers to buy AC in summers.
Godrej Appliances AVP, Product Group Head-Air Conditioners Santosh Salian said "the rise will be 3 to 5 per cent above all for end-customers."
Unit production in China is greatly delayed and the entire timetable is interrupted due to Coronavirus, leading to an rise in ocean freight charges due to the difficult shipping situations arising from the outbreak.
If a change happens in the plan, you did not receive container at the same time. There is a peak load of container demand, this will happen and it will drive the ocean freight costs higher, "Salian said.
PanasonicNSE -0.34 percent India President & CEO Manish Sharma said the company is also tracking the situation and might consider airlifting to maintain inventory level for the essential components.
According to him, there is sufficient inventory for February and ..
Read more at:
https://economictimes.indiatimes.com/industry/cons-products/durables/ac-prices-to-go-up-by-5-per-cent-due-to-customs-duty-hike-rise-in-logistics-cost-amid-coronavirus-scare/articleshow/74266216.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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