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New Delhi: The Rupee has been declining against the US Dollar. The impact of Rupee’ fall can be seen on the cost of consumer electronics, car companies that manufacture fashion and beauty products due to which everything from lipstick to car can become expensive, The Economic Times reported. The cost of such companies which are dependent on imports could increase by 3 to 7 percent.
The rupee has crossed 90 for the first time against the dollar, and this may be the reason why many companies could increase the prices of electronics, beauty products and cars. Recently, after the tax (GST) deduction, the sales of these sectors have increased rapidly, but now this benefit can be counterproductive. Despite the increase in the prices of raw materials, many companies avoided raising prices because the government could have questioned raising the price after the GST cut.
Companies that manufacture smartphones, laptops, TVs and large home appliances have made it clear that they will raise prices by 37% between December and January, the ET reported. Memory chips, copper and other parts have become expensive due to the weak Rupee. In these products, up to 3070% of the expenses come from imported goods.
Super Plastronics CEO Avneet Singh Marwah said that the benefits of GST cuts will be completely lost due to falling rupee and parts being expensive. The price of memory chips has increased six times in four months. Industry officials say that they had estimated the expenses when the Rupee was 8586 per dollar, but now the whole calculation has changed after crossing 90. Many companies have not raised prices despite rising expenses since October because they could have been accused of making profits after GST.
Now companies have started informing retailers about increasing the price. Havells will increase the price of LED TVs by 3%, Super Plastronics by 710% and Godrej Appliances will increase the prices of refrigerators and ACs by 57% from January. Energy efficiency ratings are also tightening since January, which will add to the pressure. Godrej Appliances business head Kamal Nandi said that it will be compulsory to raise prices in January. If the rupee falls further, then another hike may have to be made in the March quarter. The entire benefit of the GST cut will be lost.
India's fast-growing beauty market, which includes brands like Shiseido, MAC, Bobbi Brown, Clinique and The Body Shop, will also have a direct impact, because most of their goods are imported. Above all, GST on cosmetics is also 18%, which means no relief.
Shoppers Stop Beauty CEO Biju Qasim said, “A weak rupee increases the cost of our imported beauty products. This puts pressure on our margins. Increasing the prices of some high-end products may become a compulsion in the future.”
The impact on automobile companies is also visible. Currently, two-wheeler and car companies have reduced the prices by giving the benefit of GST cuts, which increased sales in October and November, but now this benefit may be lost due to the rupee falling.
Santosh Iyer, MD of Mercedes-Benz India, said, the prices of luxury cars may increase. We are considering raising prices from 26 January. Audi India is also thinking the same, but it is not decided yet. The government had reduced the GST on small vehicles and two-wheelers from 2831% to 18%, which reduced the prices by about 9% and led to a sharp jump in sales. But now the dollar-rupee turmoil may slow down this growth again.
