Companies say 'no' to cut prices

Industry chambers on Tuesday promised lower prices of manufactured goods after a call from P Chidambaram, but individual companies didn't have to think twice before ruling out such a proposition.

Industry chambers on Tuesday promised lower prices of manufactured goods after a call from Finance Minister P Chidambaram, but individual companies didn't have to think twice before ruling out such a proposition.

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Instead, auto makers and real estate companies asked the government to make credit available to customers at cheaper rates.

"This (two-wheeler) industry has a margin of about 4-5 per cent only and in the near future we do not see any price cuts," company Chairman Rahul Bajaj told reporters here.

"Minimum wages are increasing, fuel price has increased and electricity prices have also increased, so how do we bring down the prices of our products?" asked Brij Mohan Lall Munjal, Chairman of Hero Honda Motors - the country's largest two-wheeler maker.

They also accused public and private sector banks of not lending to potential buyers of two-wheelers. Realty leader DLF's complaint was identical: "There are no takers for housing... Ideally, interest rate should be around 7 per cent."

Their reaction was far removed from the industry's.

"I am sure you will find newer set of prices in most product categories," CII president K V Kamath said, after his meeting with Chidambaram, while Assocham Secretary General D S Rawat said: "India Inc will positively respond to the call given by the Finance Minister."

"Hotels must cut tariffs; airlines must cut prices; real estate must cut rates of apartments and homes they sell; car makers and two-wheeler makers must cut prices," Chidambaram said earlier, adding it was better than allowing inventories to build up, lay off workers and digging a deeper hole.