Consumer durables makers are waiting with bated breath as the government considers a proposal to reduce goods and services tax (GST) on air conditioners and television panels above 32 inches. At present, both categories attract 28% GST. Reports suggest that the Centre is looking to rationalise rates soon, and if the slab drops to 18%, buyers could see prices fall by about 10%.
That price dip, however, might not happen overnight. Dealers and customers are said to be holding back purchases until clarity comes in, creating some uncertainty in the market.
According to Blue Star managing director B Thiagarajan, quoted in a BS report, the timing of the decision matters. Dealers are already sitting on high levels of inventory, thanks to subdued demand during a relatively mild summer. The prospect of a rate cut makes it more likely that both dealers and customers will wait for official confirmation before making moves.
Thiagarajan further reportedly noted that if prices ease, more customers might opt for 5-star rated air conditioners, a shift that could benefit the market for energy-efficient products.
Currently, penetration of air conditioners in India is only around 7%. Industry players believe that lower prices could help that figure rise, especially as consumers show more interest in energy-efficient models.
For now, the sector is in limbo. A cut to 18% GST could mean a swift correction in prices, but till the government makes the announcement, both dealers and consumers seem inclined to hold back. The coming weeks could decide whether the market sees a surge in sales or continues to drag through muted demand.
