Consumer durables not under slashed GST rates; industry reeling under pressure: CMD, Mitashi

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Saurabh Gupta | 21 Nov, 2017
Post Goods and Services Tax (GST) the consumer durable industry feeling pressure due to rising input costs from materials to regulation norms, said Rakesh Dugar, CMD - Mitashi Edutainment.

The slashed GST rates will not going to effect on the consumer durables industry, however the industry is facing a steep price rise due to several factors including newer energy norms and higher input costs, Dugar told SME Times in an Interview. The GST Council recently slashed tax rate on 178 items from 28 percent to 18 percent.

Excerpts of the interview...

The GST council recently reduced rates on 178 items. Please share your viewpoints on revised GST rates?
Rakesh Dugar: The GST councilâs decision to review and revise the GST rates on certain items of daily consumption from 28% to 18% is a welcome move for the consumer. We hope it is the first step among many that will bring more necessary items into a lower tax bracket and help the consumer.

The revised rates have been effective from 15 November 2017. And the government had on same moved a press release for consumers to check MRP. Is industry prepared enough for overnight changes in MRP?
Rakesh Dugar: This change in MRP is not applicable to our product category, I cannot comment on how other companies would deal with this, However, we have a tight control on our movements which would allow us to cover over 90% of the inventory at a moments notice, 100% coverage within a short time frame remains a challenge due to geographical limitations.

The effect of this communication will only be on urban and metro retailers, but what about rural retail markets. It has to be reflected on the MRP?
Rakesh Dugar: The MRP change, has to be universal regardless of geography, We understand the governmentâs perspective & intention to roll this change out to the public immediately and pass on the benefits to the consumer but when practically approaching this, each company maintains a complex supply chain and there needs to be a reasonable amount time given for the entire system to be updated across the board.

Overnight changes will lead to confusion and end up having a negative effect for the consumer and company.

Report said that most companies have communicated the price changes to wholesalers, stockists and retail partners, requesting them to sell at the new prices, but Don't you think that it will be difficult for manufacturer to control the entire retail market?
Rakesh Dugar: Speaking for the Consumer Durables industry, we sell very few goods on MRP, most products are sold at an MOP (marketing operating price) which generally tends to be lower than the MRP so it is easier for us to accommodate immediate benefits and pass them to the consumer.

As for the physical changes to the MRP, yes it will be a challenge for each manufacturer but we are positive that the partners are supportive of the change and will help speed up this process.

There is a confusion on old stock. Will it be sold at old prices or new?
Rakesh Dugar: The MRP prices must be revised.

The CBEC chief was referring to legal action that complaints of wrong MRP entails under anti-profiteering provisions. What is your said on this?
Rakesh Dugar: MRP cannot be changed overnight but Fast action and uniform communication to avoid wrong changes to customer and pass on benefit.

How you see its effect on Consumer durable industries?
Rakesh Dugar: As of today, this change has no effect on the consumer durables industry, however the industry is facing a steep price rise due to several factors including newer energy norms and higher input costs.

What government can do to handle it? Your suggestions.
Rakesh Dugar: The consumer durables' industry is under pressure due to rising input costs from materials to regulation norms. A move to 18% for the consumer durable industry would be most welcome from a consumer point as it will result in neutralizing the price hikes that are happening now.