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Informist, Friday, Oct. 17, 2025

By Avishek Rakshit and Akash Mandal

KOLKATA/MUMBAI – Even though the government cut Goods and Services Tax rates to boost consumption, the benefits may prove to be momentary and prices of white goods like air conditioners will go back almost to levels before the cut in tax rate. "This is unfortunate that the GST reduction benefits is not being passed on to the consumers because of the changes which will happen in January. Which means that prices will come back to almost the same level just before," Anil Rai Gupta, chairman and managing director of Havells India Ltd., told analysts in a post-earnings call Friday.

The government cut the GST rate on air conditioners to 18% from the earlier tax rate of 28% effective Sept. 22, which made the consumer durables industry upbeat about demand for white goods. However, the GST rate on ceiling fans remained unchanged at 18%.

Gupta said that as the new energy efficiency standards for consumer durable products, as mandated by the Bureau of Energy Efficiency under the ministry of power, come into effect in January, it will entail an increase in prices of some products like air conditioners and fans.

"The kind of price increases that will happen, will have to be passed on to the consumer," he said, adding that this hike would lead to the effective price of such goods going back to almost similar levels before the cut in GST rates for many products.

In order to protect their margins, usually companies increase prices when the manufacturing cost, arising from changes in commodity inflation, taxation, and other parameters, increases.

The new Bureau of Energy Efficiency norms, which are aimed to help consumers buy genuine and energy-efficient products, is applicable on appliances like air conditioners, refrigerators, washing machines, television, ceiling fans, geysers, and solar PV modules.

The rollout of reduced GST rates also added to inventory build-up in the trade channels of consumer durables companies which led to poor sales in the quarter ended September. While trade channels rushed to clear the higher-priced inventory, online platforms resorted to deep discounting on the existing stocks and effectively, the trade channels did not procure goods from manufacturers.

In fact, Havells' white goods business, housed under the Lloyd brand, saw its top line fall by 18% on year to INR 4.8 billion and the loss widen to INR 1 billion in the September quarter from INR 243 million in the year-ago quarter.

Gupta said the inventory that the Lloyd brand carries in the trade channels should get liquidated by end of December and the second half of the current financial year is expected to fare better for the company's consumer electricals business comprising small appliances.

On Friday, shares of Havells India closed at INR 1,491.50 on the National Stock Exchange, up over 1% from the previous day. End

Edited by Ashish Shirke

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