GST Impact – Now You Have to Shell Out More Money to buy Fridge, AC & Washing Machine

ST Impact – Now You Have to Shell Out More Money to buy Fridge, AC & Washing Machine

NEW DELHI: It’s going to be the steepest price hike in four years. Come April 1, prices of CTVs, fridges, ACs and washing machines will go up by up to 10 per cent, which in absolute terms would work out between Rs 700-2,000.

Manufacturing Company’s  say cost of raw materials used in manufacturing white goods has gone up by 30-50 percent due to GST.

While steel saw a 40 percent increase in price, copper prices rose 50 percent. Supply of a chemical named MDI, which is used to create foams for refrigerators, has been falling short internationally and its price has since doubled.

 While prices of durables and appliances have been going up over the past one year, the increases have been only to the tune of 2-5 per cent. Firms attribute the coming hike to rising material costs as well as to the impact of value-added tax (VAT). “We have to protect bottomlines, which will be hurt by increasing material costs,” LG MD KR Kim said.

A Samsung official said implementation of the differential tax structure across states (as some states are not implementing VAT from April 1) would also impact prices lines. “Different incidence of taxation across states will lead to price revisions,” the official said.

Appliances firms Electrolux and Whirlpool, too, said an upward revision of fridge, AC and washing machine prices was imminent. Said Rajeev Karwal, MD & CEO, Electrolux Kelvinator, “We have increased fridge and AC prices by 5 per cent. Additional hikes are inevitable. We have to take into account factors like material costs.”

Arvind Mediratta, Whirlpool’s VP, said the price hike of up to 10 per cent would come into effect from next month. Godrej Appliances is toeing the same line.

While the 20 per cent rise in steel prices will directly impact prices of fridges, ACs and washing machines, CTV prices are being revised on account of cumulative higher costs of components like copper, aluminium and even plastics. Costs of resin and plastics, for example, have gone up by 25 per cent. The Budget, last month, had announced increase in excise duty of steel from 12 per cent to 16 per cent