Meeting Apple’s Demands to be Tough Under GST: Adhia
Rev secy says countervailing duty exemptions to go in new tax regime
I don’t know what exactly is Apple’s demand as DIPP is dealing with them. But we have limitations on giving exemptions under GST
New Delhi: India may find it difficult to accept Apple’s demand for a 15-year exemption on countervailing duty (CVD) on imported components as the country plans to roll out the goods and services tax (GST) in the coming financial year. “There is no way we can give individual exemptions under GST regime,” revenue secretary Hasmukh Adhia told ET. “All of them (CVD exemptions) will go.”
Whatever the tax on local industry, the same will become IGST or integrated GST that will be levied on inter-state trade, he pointed out. “Make in India will get a big boost,” he said. “We ha-
HASMUKH ADHIA Revenue Secretary
ve been unfair to local industry. I don’t know what exactly is Apple’s demand as DIPP (Department of Industrial Policy and Promotion) is dealing with them. But we have limitations on giving exemptions under GST.”
Normal monsoons in the current season sowed the seeds of demand resurgence in the industry that reported as much as 10% growth in sales of hair oil, shampoo and toothpastes in October, according to sources citing data from market-research company Nielsen. “We were already seeing every evidence of demand pick-up pre-demonetisation and October growth rates were well into double digits both for categories as well as for our own business and they fell off very sharply in November and December. For a strong revival, we will have to wait a little bit more, perhaps March or April,” said Sunil Duggal, chief executive officer at Dabur.
After increasing in October, the trend changed later, with sales falling by up to 7% in December, when the temporary impact of the government initiative to exchange currency notes of Rs 500 and Rs 1,000 became manifest. The transitory loss in purchasing power caused consumer bellwethers to report between 1% and 9% falls in the December quarter sales, declines that might take about two or three months to reverse as bills withdrawn in November accounted for about 86% of the currency value in circulation. According to Nielsen data, the Rs 2.5-lakh-crore fast-moving consumer goods industry could take a hit of about 1.5% in net sales, or about Rs 3,840 crore.
“In fact, Nielsen estimates that the rural market over October, November and December was down by about 60%, which was quite a surprisingly high number for us,” Unilever global CEO Paul Polman told analysts during the company’s recent quarterly call with investors.
The liquidity crunch and low demand from retailers came at a time when some companies were looking to enhance their brand salience through enhanced promotions and exciting offers. “The demonetisation in India was indeed unexpected and that saw a high singledigit organic sales growth business become in the quarter a double-digit decline in organic business. In India, demonetisation cost us a swing from strong growth through Q3 to a decline in Q4,” Colgate-Palmolive global CEO Ian Cook said in an investors’ call.
To counter the impact of the currency swap, finance minister Arun Jaitley announced several incentives built around farm infrastructure and credit for the rural and low-income consumers, measures that could revive consumption. Godrej Consumer Products, whose product range includes soaps and mosquito repellants, said it had 11-12% sales growth in the urban areas in October, with rural sales expanding faster. “The expectation was that in November and December, we would have had a double-digit growth if the same rate were to continue. Our belief is that FY17-18 should be a year of very strong recovery for FMCG,” said Vivek Gambhir, MD, Godrej Consumer Products.