Tumbling rupee to push up prices of electronic goods

Kolkata: Prices of television, refrigerator and washing machine are set to go up due to steep depreciation of the rupee against the dollar, two senior industry executives said.

Smartphone makers such as Xiaomi, Vivo and OnePlus plan to absorb the exchange rate impact as of now, with the industry fearing a slide in sales since prices are all set to go up due to increase in goods and services tax on smartphones to 18% from 12%. But they will factor the exchange rate in the pricing of future launches, the executives said.

A Xiaomi India spokesperson said the rupee depreciating against the dollar is impacting the company. “We are continuously tracking the exchange rate trend and will take a call based on where it stabilises,” the person said.

The development comes just about a month after several consumer electronics and home appliances brands increased prices due to higher logistic and component sourcing cost from coronavirus-hit China. LG and Panasonic will increase prices of their products by 2-4% while several other brands are likely to pass on the impact of rupee depreciation to consumers from next month. The rupee on Friday touched a record low of ₹74.50 against the dollar.

Panasonic India CEO Manish Sharma said the company is increasing AC prices by 2-3% from next week, while other products will be hiked from next month due to the exchange rate.

LG India has informed retailers that prices will be hiked across models by 3-4% from Monday to maintain profit in the wake of 3.5% increase in raw material costs due to rupee devaluation, executives said. The price hike will be in refrigerator, washing machine, AC, microwave oven, water purifier, dish washer, air purifier and ceiling fan.

Samsung, too, is considering a similar price hike, executives said. LG and Samsung did not revert to emails. Industry executives said several companies like Godrej Appliances and Haier, who have recently hiked prices, may increase prices again next month.

Godrej Appliances business head Kamal Nandi said the last price hike earlier this month had factored the currency exchange rate at Rs 71 and further depreciation will hit hard since around 70% of materials in value terms are imported. “We will evaluate the full impact in April,” he said.

Retailers, however, are scared that demand may slip considering footfalls and sentiments have already taken a hit due to the virus scare. “Consumers are now in a paranoia, resulting in a short-term slug,” said Pulkit Baid, director at electronics chain Great Eastern Retail. “Brands should not make erratic price hikes as demand could then become more sluggish.”

Several brands that are largely dependent on China for components had hiked prices last month and early this month due to lower production there and an increase in both ocean freight and higher cost associated with airlifting of components, to tide over the immediate shortage. The price hike had also factored the 2.5% increased duties on some components in the recent Union budget.

Source Article

Lois C. Ferrara

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