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Indian consumer durables market is broadly segregated into urban and rural markets, and is attracting marketers from across the world. The sector comprises of a huge middle class, relatively large affluent class and a small economically disadvantaged class. Global corporations view India as one of the key markets from where future growth is likely to emerge. The growth in India’s consumer market would be primarily driven by a favorable population composition and increasing disposable incomes.

Per capita GDP of India is expected to reach US$ 3,273.85 in 2023 from US$ 1,983 in 2012. The maximum consumer spending is likely to occur in food, housing, consumer durables, and transport and communication sectors.

Market Size

  • The growing purchasing power and rising influence of the social media have enabled Indian consumers to splurge on good things. Import of electronic goods reached US$ 53 billion in FY18.
  • Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48 billion) in 2017. India is one of the largest growing electronics markets in the world.
  • The industry had a total market size of Rs 76,400 crore (US$ 10.93 billion) in FY19 in which Rs 32,200 crore (US$ 4.61 billion) was contributed from domestic manufacturing.
  • Television industry in India is estimated to have reached Rs 740 billion (US$ 10.59 billion) in CY2018 and projected to reach Rs 955 billion (US$ 13.66 billion) in CY2021.
  • As of FY18, washing machine, refrigerator and air conditioner market in India were estimated around Rs 7,000 crore (US$ 1.09 billion), Rs 19,500 crore (US$ 3.03 billion) and Rs 20,000 crore (US$ 3.1 billion), respectively.
  • India’s smartphone market grew by 14.5 per cent year-on-year with a shipment of 142.3 million units in 2018. India is expected to have 829 million smartphone users by 2022. Smartphone shipments in India increased eight per cent year-on-year to reach 152.5 million units in 2019, thereby making it the fastest growing market of the top 20 smartphone markets in the world.
  • The S&P BSE Consumer Durables Index is up 6.8 per cent in Jan 2020 and gained 32.1 per cent in one last year.

Investments

 According to the Department for Promotion of Industry and Internal Trade, during April 2000 – June 2019, FDI inflows into the electronics sector stood at US$ 2.45 billion.

Following are some recent investments and developments in the Indian consumer market sector.

  • In December 2019, Kent RO Systems Ltd announced an investment of Rs 150 crore (US$ 21.46 million) to set up a new manufacturing unit over next three years.
  • In November 2019, Nokia entered in partnership with Flipkart to enter consumer durables market in India and plan to launch smart TVs.
  • In October 2019, Apple Inc. entered in agreement with Maker Maxity mall, co-owned by Reliance Industries to open its first company-owned iconic outlet in India.
  • In August 2019, Voltas Beko launched India’s first five star washing machine.
  • In July 2019, Voltas Limited entered into partnership with Energy Efficiency Services Limited (EESL) to manufacture and sell 5-star rated Inverter Air Conditioners.
  • In April 2019, TCL Electronic announced its entry into home appliances market in India.
  • Xiaomi became the India’s largest brand network in the offline market, having presence in over 790 cities in the country.
  • According to the retail chains and brands, there is 9-12 per cent increase in the sales of consumer electronics in Diwali season in October 2019.
  • The smartphone shipment witnessed a year-on-year growth of 9.3 per cent in July-September 2019 with 46.6 million unit shipped. 
  • Consumer durables loans in India increased by 68.8 per cent to Rs 5,445 crore (US$ 780 million) in September 2019.
  • Micromax plans to invest US$ 89.25 million by 2020 for transforming itself into a consumer electronics company.
  • Haier announced an investment of Rs 3,000 crore (US$ 415.80 million) as it aims a two-fold increase in its revenue by 2020.

Government Initiatives

  • In January 2020, the Bureau of Energy Efficiency (BEE) made it mandatory for all room air conditioners to have a default temperature of 24 degrees Celsius.
  • National Policy on Electronics Policy was passed by the Ministry of Electronics & Information Technology in February 2019.
  • A new Consumer Protection Bill has been approved by the Union Cabinet; Government of India that will make the existing laws more effective with a broader scope.
  • The mobile phone industry in India expects that the Government of India's boost to production of battery chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025.
  • The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for investors by amending the M-SIPS scheme, in order to further incentivise investments in electronics sector, create employment opportunities and reduce dependence on imports by 2020.
  • The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) under the automatic route in Electronics Systems Design & Manufacturing sector. FDI into single brand retail has been increased from 51 per cent to 100 per cent; the government is planning to hike FDI limit in multi-brand retail to 51 per cent.

Road Ahead

Indian appliance and consumer electronics (ACE) market is expected to increase at a 9 per cent CAGR to reach Rs 3.15 trillion (US$ 48.37 billion) in 2022. Demand growth is likely to accelerate with rising disposable incomes and easy access to credit. Increasing electrification of rural areas and wide usability of online sales would also aid growth in demand.

Note: Conversion rate used as on January 2020, Re 1 = US$ 0.01402

References: Media reports, press releases, Press Information Bureau (PIB), Union Budget 2019-20, Boston Consulting Group, International Data Corporation.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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