Impact of Gulf war: Input costs make electronics, cars & more goods expensive
Automakers are considering a 2-3% increase in prices; Consumer electronics and devices may become 5-6% more expensive due to heavy use of plastic components. While luxury car manufacturers Mercedes-Benz and Audi announced price increases of approximately 2%, effective April 1, mainstream car manufacturers are also completing their revisions. Manufacturers said prices of shoes, synthetic fiber-based clothing and decorative house paints may also increase by 9-10%.
Senior executives across industries said price increases could erode some of the sales volume gains from recent GST cuts but stressed they had limited options as supply chains became increasingly unstable.
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“Price hike is inevitable,” said Kamal Nandi, head of white goods business unit at Godrej Enterprises.
Some Paused Raises in March
“We will probably increase prices by 5-6% from April,” said Nandi of Godrej Enterprises, which manufactures refrigerators, washing machines and air conditioners. “Input costs have risen sharply in the past month. Every time we talk to our plastic suppliers we see that they are increasing prices and are reluctant to enter into long-term contracts.”
A senior automotive industry executive, who wished to remain anonymous, said most manufacturers are planning price increases starting from April. “Input costs are increasing. Companies are holding back on sudden increases as March is an important month before the end of the financial year to meet sales targets,” he said.
The Automotive Component Manufacturers Association (ACMA) recently informed the government that imports of petrochemical-based materials such as chemicals, synthetic rubber, aluminum scrap and polypropylene are delayed, with cost increases due to transportation disruptions.
“While government and industry are making all efforts, supply chain disruptions are rapidly intensifying,” ACMA chief executive Vinnie Mehta said. “The conflict in West Asia continues to create uncertainty and we are monitoring developments closely.”
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Prices of raw derivatives such as plastics, resins and polymers, including polyethylene and polypropylene used in packaging, rose by up to 25% last month, company executives said. A similar increase was seen in polyester staple fiber prices.
International freight rates have increased by 7-10 percent, while transportation costs of imported raw materials and components have increased; The rupee lost nearly 2 percent of its value against the dollar.
Berger Paints India will increase prices of solvent-based products, waterproofing emulsions and industrial paints by an average of 5% from March 25. “We will continue to monitor input prices as they change on a daily basis,” chief executive officer Abhijit Roy said. “We may soon have to consider a second phase of price increases.”
Harkirat Singh, managing director of footwear brand Woodland India, said the company’s suppliers “have asked us to increase prices as they are purchasing raw materials at significantly higher costs” and the company may increase prices by 8-12% from April.
