Consumer Durables Industry

Budget Measure

Reduction in dividend tax from 20% to 10%

Second generation reforms and increase in infrastructure spending to boost growth

Budget Impact

The reduction in dividend tax is expected to increase cash flows, which would enable these companies to plough profits back into the business. Besides, this would also result in higher dividend pay out in coming years.

Presently, the Indian consumer durable industry is witnessing slow down in demand due to slower economic growth. With the acceleration of second generation reforms and increase in infrastructure spending, one can expect the Indian economy to record higher growth. This in turn would increase demand for consumer durables.

Industry wish list

Reduction of customs duty on colour picture tube from 35% to around 25%

Restriction against illegal imports (Nepal and China) of consumer durables into the Indian market

Acceleration of reforms for higher GDP growth.

Key Positives

Penetration of durables continues to remain sluggish when compared to other developing economies.

Rising income levels, consumption patterns and urbanization are some of the key factors that would result in higher growth in sales.

Easy availability of finance has stimulated consumers to buy durables.

Convergence is expected to boost overall sales for the industry.

Key Negatives

Higher import duty on colour picture tubes prices has suppressed margins.

Lower agricultural output and higher dependence on seasonal rainfall has affected rural demand.

Threats of cheaper imports from China and other South East Asian countries.

The industry is highly competitive. As a result, realisations are on the decline.