Air cooler industry facing tough time post GST

Sumeer Singh

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Tribune News Service

Bathinda, May 4

The imposition of GST (Goods and Services Tax) on air coolers has dealt a severe blow to cooler manufactures in Bathinda this season.

Against VAT of 6.05 per cent (prior to the implementation of GST), 18 per cent GST on air coolers has triggered 50 per cent dip in sales that has forced manufacturers to cut their production up to 50 per cent.

The high rate of tax coupled with lower than normal temperature these days has marred business prospects for one of the largest cooler manufacturing hubs in the northern region.

The manufacturing cost of coolers has also increased as tax on GP sheets (galvanised plain sheets), a prime component used for manufacturing coolers, has also been increased from 3.85 per cent (VAT) to 18 per cent (GST) now.

Earlier, one kg GP sheet was priced at Rs 56 (including taxes), but post GST, the price for the same volume has increased to Rs 71. Around 30 kg of GP sheet is used for manufacturing a cooler.

As manufacturing cost escalated, it subsequently led to price increase of Rs 1,000 to Rs 1,500 for a cooler.

The manufacturers here said as customers are not turning up in the market, they were wary to further hike the prices so as to avoid affecting their sales.

Talking to Bathinda Tribune, Rakesh Gupta, patron of the Northern Cooler Manufacturers’ Association, said, “The customer is not willing to pay increased prices of coolers. They are either stalling their purchasing plans till next month or switching to buy ACs than buying a cooler priced between Rs 4,000 to Rs 10,000.”

“Apart from 18 per cent GST, substantial price increase of raw material such as GP sheet, copper, aluminum and high rates of electricity has taken toll on our sales, forcing us to cut down on production up to 50 per cent this season. A cooler is not a luxurious item. It is rather a necessity and even a common man can afford it. Therefore, the Union government could have taxed it lower so that maximum people can get benefit,” Gupta added.

A group of cooler manufacturers at Industrial Growth Centre shared that while they had anticipated a low business scenario for this season, sustaining losses of this magnitude for the coming seasons would be a death knell for them with a few of them even hinting that they might stop operations completely.

With more than 70 small and large-scale manufacturing firms, cooler industry in Bathinda is the second largest in the region after Delhi that caters to Punjab, Haryana, Rajasthan and Himachal.