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Consumers to benefit in most segments
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Corporate India said the cut in excise duty and service tax will bolster consumer confidence. It will also help companies tide over the impact of a global downturn.

“The Government should work on a further cut in interest rates and encourage banks to lend. Lack of consumer finance in the durables industry has been a constant challenge. We may pass on about one per cent cut to the consumers,” said Mr V. Ramachandran, Director Sales and Marketing, LG Electronics India Ltd. The durables sector has been seeing inventory pile-up and cut in production since the third quarter.

Several steel manufacturers too, intend to pass on the reduction to the customer. “It’s a good step and should stimulate demand with consumers getting better rates.

“We would be passing on the benefits to our consumers. Where we sell directly to the end customer we will be passing on the benefit of the reduced two per cent,” said Mr Jayant Acharya, President - Sales and Marketing, JSW Steel.

However, DTH service providers said that though it is a welcome move, customers are unlikely to reap the gains. The relatively new industry, which subsidises its set top boxes and is a big advertiser, is “bleeding”.

Mr Jawahar Goel, Managing Director of Dish TV, said, “DTH players are reeling under intense pressure from multiple taxes by the Centre and the States, the tax element of DTH companies is as high as 40 per cent. The Government has not taken any step for the past two years to rationalise licence fee on DTH from 10 per cent of gross revenue to 6 per cent, despite a strong recommendation from TRAI. This needs to be corrected.”


The telecom sector also responded favourably to the service tax cut. “This move will help stimulate demand for products and services by making them more affordable,” said Mr Manoj Kohli, Joint MD and CEO, Bharti Airtel.

The hotel industry, however, said that the move will not necessarily have an impact on tariff cut. “The industry would have been happier if the Government removed luxury tax. The latest announcement will not see any reduction in hotel room rates,” said Ms Manju Sharma, spokesperson, Jaypee Hotels.

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