Fan makers are upset over the 28% Goods and Services Tax rate fixed for the industry saying that fan was not a luxury item. “Fan is a mass consumption item for the common man, yet fans and air conditioners have been grouped in the same GST bracket of 28 %”, said Rohit Mathur, chairman of the Indian Fan Manufacturers’ Association, the apex industry body. The members include Crompton, Orient, Bajaj, Usha, Havells, Anchor, Ortem, Polar, Anchor and Luminous. “Competition is very stiff and the industry operates on thin margins. A price hike may become unavoidable now,” Mr. Mathur said. The organised fan industry currently pays taxes of about 26 %.
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The industry capacity is estimated at around five million fans monthly, with an annual growth of about 10%. The manufacturing units ate mainly located in excise-free zones of Himachal Pradesh and the North Eastern States. There are very few units outside the excise-free zone and this is another area of concern for the industry.
“This is also an issue besides the rate hike one,” Mr. Mathur said. Although fan makers have been assured a refund (as operating in an excise free zone translates into a duty benefit of around 9%), no notification has been issued so far in this respect.
A note prepared by the Association said that fan and air conditioners have been grouped in the same GST tax bracket, although the fan is an item of mass consumption like bicycles and mobile phones. It is an item of necessity next only to food clothing and shelter.
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The total industry size is ₹9,000 crore of which organised players have about ₹6,000 crore share. The association represents the interest of the organised manufacturers of ceiling, table, pedestal wall and exhaust fans besides special purpose industrial fans.