Durables makers fear duty on Chinese imports.

Indian consumer durable manufacturers that have been dependent on China to source cheap white goods for sale in India may re-think their strategy with the Central government warning to impose a safeguard duty on Chinese products for as long as ten years to protect the interests of the domestic industry.

“Provided that the Central government is of the opinion that such articles continue to be imported into India from the People’s Republic of China so as to cause or threatening to cause market disruption to domestic industry, the Central Government may, notwithstanding the measures taken by the domestic industry towards adjustment to such market disruption or any threat arising thereof, extend the period of imposition of such safeguard duty for a period not beyond ten years from the date on which the safeguard duty was first imposed,” according to an excerpt from the Union Budget 2012.

Consumer durable makers feel this stance of the government may provide a further fillip to local manufacture/assembly of appliances. “We source almost 10 per cent of our products from China. As and when this duty is levied on Chinese goods, it will happen to everyone. So we will remain competitive to our rivals. Since we source 90 per cent of our products from India, we will get benefit of cost-reduction,” said Shekhar Bajaj, CMD at Bajaj Electricals.

Kamal Nandi, VP, Godrej & Boyce said, “We do not see any significant impact on our business. We have already taken steps in that direction. Over the past two years we have become more self-sufficient and we have built our capabilities in India.” Godrej Appliances a la Videocon has set up significant domestic manufacturing/assembling capacities for its core products such as refrigerators. The firms also sell washing machines and microwaves apart from other electronic items in India

“Safeguard duty can be imposed on ad-hoc basis till anti-dumping duty is proved. We do not see this move having any significant impact on our business as the entire process is very long. Moreover India is a huge market and over time when the requirements of our products go up in India, we might manufacture in India as well,” said Sunil Sikka, president, Havells India. Havells, a leader in electrical goods, that has entered the appliances market recently, sources almost all its appliances requirement from China. At present, the company looks at China as a sourcing, R&D and manufacturing base and hopes to earn $100 million revenues in two years from its joint venture (JV) with China’s Shanghai Yaming Lighting. It sources goods worth €100 million from China for its operations across Europe, Latin America and India, of which goods worth €20 million comes to India alone, according to Sikka.

“We are evaluating the situation. But the impact shouldn’t be that significant since we also source from Thailand and India,” said Eric Braganza, president, Haier India.

Source : mydigitalfc.com