India printer market dips in Q2 2017 due to GST

India HCP market Q2 2017
The HCP market size in India reached 714,129 units (–5.8 percent) in terms of shipments in Q2 2017 — mainly due to the implementation of the Goods and Services Tax (GST) from July 1, 2017.

Prior to GST, Printers used to have roughly 18 percent tax which was split between 12 percent Countervailing Duty (CVD) and 5.5 to 6 percent VAT depending on the state. However, Post GST, single function printers continue to be taxed at 18 percent slab while multifunction printers (MFPs) are taxed at 28 percent which has led to most vendors increasing prices of MFPs by 10-12 percent from July onwards.

“Owing to GST implementation, there was resistance from distributors in stocking inventory during May/June as the India government was only willing to give input tax credit up to 60 percent of their total GST liability against the excise duty already paid for goods purchased before July 1 (without furnishing the original excise payment receipt) resulting to a decline in overall demand,” said Nishant Bansal, research manager, IPDS, IDC India.

HP regained top position in the Inkjet market with a unit share of 45.9 percent after posting a 7.2 percent YoY growth and 5.1 percent QoQ (quarter-on-quarter) growth mainly due to push of low end Ink advantage models. HP Inc. continues to be the market leader in laser HCP (Printer-based) market with 57.4 percent market share.

Canon, like HP had a strong quarter in Inkjet with a QoQ growth of 13.0 percent on the back of strong push of low end PIXMA MG series. Canon also regained its number one position in the copier market with 32.3 percent market share and registered a 13 percent YoY growth on the back of strong sales through its direct channel to large enterprises.

“Entry level Inkjet models were the major driving force behind HP and Canon volume growth in Q2. Demand from consumers owing to GST clearance sales in smaller cities/towns were the key factors driving the demand in entry level inkjet segment,” says Abhishek Mukherjee , Senior Market Analyst, IDC India.

Epson was impacted by GST implementation and hence took an opportunity to liquidate their excess inventory in traditional IT channels. However, with slower than expected demand during the first half of the quarter as consumer was expecting the printers to become cheaper post GST, Epson had a weak sell-in and suffered a QoQ decline of 28 percent. However, Epson is expected to rebound in 2017Q3 as demand from both distributors and end user picks up post GST implementation.

IDC India Forecast

Markets are likely to recover in 2017Q3 as July saw good demand for both Ink and laser printers both from distributors and end users.

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