Festive retail sales get hit, buyers await GST, price cut

NEW DELHI: The news of a reduction in goods and services tax (GST), while cheering consumers and companies, has also led to a peculiar problem for retailers - both offline (on ground) and online.

Companies say that festive demand, that usually begins from Ganesh festival in Maharashtra and Onam in the south, is turning out to be a muted affair as buyers wait for the GST rates to actually come down, which eventually will see fall in retail prices.


"We are worried as the festive opening is normally a bumper period, running up to Dussehra and Diwali. But the news of a GST rate cut and impending reduction in retail prices is keeping buyers out of the market till the time a decision finally happens on the ground," car and consumer goods companies and retailers told TOI.

The situation is the same for white goods retailers, such as TVs, air-conditioners, and dishwashers. "We are already getting numerous queries from buyers about price cuts and when they will actually happen. Buyers say they will now wait for the price reduction before taking deliveries," CEO of one of the top consumer goods companies said.

The exercise to rationalise GST rates is likely to see the government bring down the taxes on certain categories of consumer goods and autos. For example, small cars and two-wheelers are likely to see GST rates come down from 28% to 18% slab.

For ACs, TVs (larger than 32 inches) and dishwashers, it's a similar reduction in GST that is being anticipated.

Companies are in a dilemma now, as price cuts will only happen when GST Council approves the cuts and announces final tax slabs. Consumers, however, have decided to wait rather than purchase, with many even cancelling car bookings.

Saharsh Damani, CEO of Federation of Automotive Dealers Association (Fada), said they have already taken up the matter with commerce minister Piyush Goyal and heavy industries minister HD Kumaraswany. "We are already seeing pressure in Kerala and Maharashtra when it comes to sales conversions. Dealers are carrying high inventory due to the expected festive rush and if the stock is not liquidated within 60 days, banks will charge higher interest rates (on inventory finance) while slapping penalties. We are seeking help from banks, car and two-wheeler companies and govt. We have been assured of help by both the ministers." Brands such as LG, Samsung and Sony are also witnessing a slowdown in sales of their TVs.


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