Duty cuts expected to boost sales of home appliancesThe new budget has abolished excise duty on household equipment in a bid to increase electricity consumption.
Anjana Koirala had been thinking of buying a washing machine to lighten her household chores as she led a busy lifestyle and also had health issues. So when the budget for the fiscal year 2021-22 declared that excise duty on electronic home appliances would be removed, she said hooray.
“I had planned to buy a washing machine last winter, but the prices were high so I was waiting for the festival shopping season to get discounts and offers,” said Koirala, 35, who works in a private insurance company.
But Koirala may have to wait for some months before she can lay her hands on cheaper appliances. Sellers of electronic devices say that it will take at least two months for the new prices to come into effect with old stocks remaining.
The government budget for the upcoming fiscal year unveiled last Saturday has slashed customs duty on induction cookers to 1 percent, and abolished excise duty on electronic home appliances like refrigerator, grinder, rice cooker and fan in a bid to increase electricity consumption.
Import duty on refrigerators has been trimmed from 20 to 15 percent, and on washing machines from 30 to 20 percent.
Duty on other household equipment such as rice cooker, grinder, fan, microwave and dryer, among others, has been brought down from 15 to 10 percent.
The government had been charging 5 percent excise duty on electronic home appliances, traders said.
Nepali consumers care more about prices and less about brands, so the new budget provisions which will automatically bring down prices will enhance sales, dealers said.
Local home appliance dealers seem to be excited by the reduction in customs duties as they see a rise in business. The prices are also expected to be competitive as the market offers various brands of electronic home appliances.
Ganesh Raj Pandey, senior manager at Him Electronics, the authorised distributor of Samsung electronic home appliances for Nepal, said that sales would definitely increase with the decline in prices resulting from the drop in customs duty and abolition of excise duty as demand continues to remain high.
"Refrigerator sales have been swelling by 10 percent annually, and we expect demand to grow by 20-25 percent due to the reduced prices," Pandey said. "Sales of washing machines that have been growing by 15 percent every year are estimated to rise to 25-30 percent," he added.
Demand for washing machines has been on the rise in recent years due to changing lifestyles and increased disposable income. Demand for premium electronic home appliances is increasing not only in Kathmandu Valley but elsewhere in the country too.
"Kathmandu accounts for 70-80 percent of all washing machines sold in the country, but now demand is rising in small markets outside the valley too," Pandey said. He added that sales of home appliances in the low and medium price ranges would likely rise faster.
“Prices of Samsung refrigerators, washing machine and microwave ovens will fall by 5-10 percent according to the model and size,” he said.
“The new prices will be implemented as soon as the remaining stocks are cleared. The new prices will come into effect probably from mid-August this year,” Pandey told the Post.
Pandey said that as the government had increased excise duty on refrigerators, prices went up in the current fiscal year, leading to retailers and consumers complaining about the expensive products.
According to the Department of Customs, Nepal imported washing machines worth Rs2.07 billion and refrigerators worth Rs3.13 billion in the first 10 months of the current fiscal year.
During the same period of the last fiscal year, imports of washing machines were valued at Rs1.58 billion and imports of refrigerators came to Rs2.12 billion. Nepal imports most of its refrigerators from India, and washing machines from China and India.
Against a backdrop of increasing prices of electronic home appliances in the international market, the cancellation of excise duty and reduction of import duty will provide welcome relief to Nepali consumers, dealers said.
Bishnu Gyawali, assistant general manager at CG Electronics, the authorised distributor of LG, TCL and Godrej and CG brands in Nepal, said that a stronger dollar and rising freight charges caused by Covid-19 disruptions to the global supply chain had made electronic home appliances dearer from last year.
“Prices of electronic home appliances have increased by around 50 percent since the pandemic hit the nation in mid-March last year,” Gyawali said. "But the consumer oriented provision in the new budget will provide relief to Nepalis."
He added that prices might fall by 5-7 percent once new shipments arrive in the market. Sales trends in electronic home appliances have not changed from pre-pandemic days, he said.
Gyawali said that their company would probably launch the new rates during Dashain after the remaining inventory is sold as sales had ground to a halt due to the lockdown. "Refrigerators have remained in stock from last year due to the lockdown during the shopping season," he said.
"Dashain is the major shopping season for electronic home appliances while business is also good during the period mid-April to mid-July," dealers said.