With raw material prices rising, the Indian equipment industry is likely to expect an increase of 10 to 15%. These price increases could come into effect from mid-July 2021. Due to government blockades across India to prevent the spread of COVID-19, sales of non-essential goods, including durable goods, have been temporarily suspended while commodity prices continue to rise.
The disruption in the supply chain coincided with the start of the summer season when consumers in India started buying appliances such as refrigerators and air conditioners.
According to Motilal Oswal Financial Service’s India Strategy Report, global commodity prices rose in 2021 and the CoreCommodity CRB index rose 70 percent year over year in April 2021.
The report also states that sectors such as durable consumer goods will be affected by the rise in prices. “Consumer demand has been lukewarm, but raw material costs are rising. The industry can hold out for a month, but ultimately the prices would have to be passed on, ”says Delhi-based consumer goods analyst Varun Khosla of CKS Smart Equity.
“The government requested temporary relief in the form of a reduction in the tax on goods and services (GST). However, since this is not granted, the industry has to raise prices. It’s been a tough year, but we have to support companies, ”said the senior vice president of an equipment company.
According to corporate surveys by the Retailers Association of India (RAI), the consumer goods and electronics category saw annual sales growth of 10 percent and 15 percent, respectively, in January 2021 and February 2021.