The Ceylon National Chamber of industries (CNCI) expressed its concern over an issue faced by some of their member companies since some of the leading supermarkets have requested a margin increase to compensate their increased expenses owing to the recent VAT increase by the Government.
These CNCI member companies have shown the chamber their inability to increase the margins further due to prevailing economic conditions. They have also pointed out that the local industries are already giving much higher discounts to the super markets than multi-national companies and therefore, the local industries are unable to grant any further discounts.
According to the Chamber CNCI, this situation is further compounded when it comes to SMEs and others companies that are producing in moderate volumes and are obviously not in a position to allow any further discounts due to high costs of production. This unfortunate scenario has become an emotional threat to such manufacturers subsequent to having a reasonable fear of their company’s future if they are delisted by supermarkets.
CNCI Chairman Tissa Seneviratne said that this situation may hamper growth in respective industries and will be a huge blow to local manufacturers as a whole. “We have also learnt that in the recent budget, with the VAT increase, that the Government has removed the 25% maximum limit on ‘non-vatable’ items, thus granting a huge release to the super markets that we believe is much greater than the impact from VAT increase,” Seneviratne added.
In the interest of protecting and supporting the local manufacturers, the CNCI has written to the esteemed and leading supermarkets in the country and requested them not to take harsh decisions against local manufacturers and de-list them on account of their inability to grant any further discounts.