GST shock for electric cable, wire prices
According to industry estimates, prices could increase 8-10 per cent under the new indirect tax regime.
The estimated market size of electric wire and cables is around Rs 7,000 crore, and 60 per cent of the market is organised led.
The organised players are looking to pass on the burden of higher tax to the consumers under GST.
Responding to a query from India said the price of electric wire would automatically increase under the new tax structure. Earlier the tax rate (inclusive of excise and VAT) was 18 per cent. After the implementation of the GST, the tax would rise to 28 per cent across the country.
“The increase in tax in case of cables and wires is more glaring. The market operating prices are expected to increase by 8-10 per cent once the GST is implemented. Sources said an industry delegation has highlighted the sharp rise in tax rate to central government officials.
Manufacturers also questioned the logic of placing a higher tax when a significant portion of the industry remains unorganised.
“A lower tax rate would have certainly helped the industry becoming more organised,” said a senior official of a wire manufacturing company. He said the unorganised sector would continue to thrive as recycled and scrap copper could be easily smelted to make cheap items.