HP Inc is forced to reassess its plan to open another manufacturing facility in the country in the wake of the Goods and Services Tax
The Hindu BusinessLine reported on 5 September 2017 that HP Inc India has been forced to reconsider its proposal to open a second manufacturing facility, due to the recent institution of the Goods and Services Tax.
HP Inc, had expressed its desire to set up another facility back in September 2015, planning to dedicate it solely to printer manufacturing. This facility was to be HP Inc’s response to Prime Minister Modi’s call for businesses to ‘Make in India’.
However, in an interview with BusinessLine, Hp Inc India’s Managing Director, Sumeer Chandra, said, “In light of GST coming in now, we are again reassessing our manufacturing model. A study is underway right now, we have not taken a final decision as yet.” He went on to add, “There are some tax changes that have happened. We have seen a tax change in our printing category. So, we are now relooking at our proposal.”
The Goods and Services Tax, which was rolled out in India on 1 July 2017, was instated with the goal of making the country a single unified common market and serves as a single tax on the supply of goods and services from the manufacturer to the consumer. The benefits of this scheme include minimal cascading of taxes, improved competitiveness, uniformity of tax structures, and ease and transparency of compliance.
After taking into consideration the institution of the tax, HP Inc India had published a revised price list, stating that “the retail price of ink cartridges has been hiked by 12-15 per cent while that of MFPs by 8-10 per cent.” In the wake of GST, MFPs were taxed at 28 percent, a 10 per cent rise from before, and ink cartridges are also now being taxed at 28 per cent as opposed to the 15-18 per cent they were taxed previously.
However there was some good news for HP Inc’s current Indian manufacturing facility, as single-function printers, notebooks and desktops have seen no change in tax, prompting Chandra to comment that the facility “still has capacity expansion opportunities. The India factory is producing most of our commercial desktops. We are market leaders with almost a third of the PC market.”