New Delhi, Feb 1 (PTI) Increase in customs duty on imported compressors for refrigerator and air conditioner along with parts of electronic appliances will increase the prices in short term but will boost local manufacturing in future, industry body CEAMA said on Monday.

However, manufacturers such as Panasonic, Blue Star and LG said, the hike would have a minuscule impact on product pricing and would bear the impact instead of passing it on to the consumers ahead of onset of summer season for cooling products like refrigerator and air conditioner.

Presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman proposed increasing customs duty on imported compressors for refrigerators and air conditioners to 15 per cent from 12.5 per cent.

Reacting to the announcement, Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Kamal Nandi said,"The customs duty revision for the compressors, used in refrigeration and air conditioning, from 12.5 per cent to 15 per cent will promote indigenous manufacturing of the same and is in line with making India self-reliant in the long run. There have been increases in import duties on motors and PCBs as well."

He, however, cautioned that "these are good for the medium and long term but will impact price adversely in short term due to insufficient output capacities."

Presenting a contrarian view, Panasonic India & South Asia President & CEO Manish Sharma said the customs duty hike would have very minimal impact and would be absorbed by the company.

"Hike of 2.5 per cent on the customs duty of AC would impact only 0.5 per cent to 0.75 per cent of the total bill of the material (of cooling products). We are not going to pass on this small hike on the customers," Sharma added.

According to him, as the season for sales of AC starts this month starting from the south, they would not opt for a price hike at this stage.

"We will speed up the local sourcing of components to bring this down," Sharma added.

Expressing similar views Blue Star Managing Director B Thiagarajan said the increase in the customs duty on compressors would have "very negligible" impact and this is nothing in comparison to the price increase in the metal, which the appliances industry has faced recently.

"This increase is part of the Phased Manufacturing Programme (PMP), where the government would slightly increase the customs duty on import to promote the domestic manufacturing," he said.

LG Electronics India VP- Home Appliances Vijay Babu said the company would not pass on the impact of the customs duty hike in the compressors.

"We would not increase the prices of refrigerators and AC," he said.

CEAMA said the Budget focuses on electricity connections portability for consumers and capital infusion of Rs 1,000 crore towards solar energy, Rs 1,500 crore to renewable energy development, which will help reduce the burden on the electricity grid.

"All this is expected to lower the electricity costs over time. Coupled with the tax exemptions on affordable housing, this could aid in some pick up in appliances & electronics penetration as well," said Nandi, who is also Godrej Appliances Business Head & Executive Vice President.

The government has reiterated its commitment to reforms like the introduction of PLI (Production Linked Incentive) scheme with a budget outlay of Rs 1.97 lakh crore across 13 sectors which reaffirms their intent to provide impetus to domestic manufacturing, Sharma said.

"We look forward to implementation details here to participate," he said.

Haier India President Eric Braganza said the Budget is a testimony to the Indian government's vision to accelerate Aatmanirbhar Bharat initiative.

Super Plastronics, a brand licensee for Kodak said the government intends to boost local manufacturing through its announcements in various PLI scheme in the next five years.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)