Industry Analysis  - ( 03/11/2024 To 09/11/2024  )

Indian Consumer Market

Introduction

The Indian consumer durables market is broadly segregated into urban and rural markets and is attracting marketers from across the world. The sector comprises a huge middle class, a relatively large affluent class, and a small poor class. The sector includes consumer electricals such as fans, kitchen and cooking appliances, lighting devices, as well as white goods such as washing machines, televisions, refrigerators, and air conditioners.

The market share in the consumer durables industry is moving from the unorganised to the organised sector. According to estimates, 30% of the total market is still unorganised, which provides listed Indian players with a significant opportunity to further increase their market share going forward. Artificial intelligence and manufacturing automation will be important future trends as consumer awareness increases regarding technology advancements and their applications across multiple sectors. In order to increase the production efficiency of various consumer durables, Industry 4.0 will stimulate investments in R&D, technology infrastructure, and manufacturing processes.

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 income. During (April-June) 2024, electronics exports reach US$ 8.44 billion. With robust growth, India aims to achieve electronics manufacturing worth US$ 300 billion in electronics exports of US$ 120 billion by FY26.

Market Size

Indian Appliance and Consumer Electronics Industry market size is expected to nearly double in the next 3 years, reaching approximately Rs. 1.48 lakh crore (US$ 17.93 billion) by 2025.

  • Indian appliances and consumer electronics industry stood at US$ 9.09 billion in 2022 and is expected to more than double to reach Rs. 1.48 lakh crore (US$ 21.18 billion) by 2025. Electronics hardware production in the country stood at US$ 87 billion in 2022. India's consumer electronics and home appliances market is set to grow by US$ 2.3 billion between 2022 and 2027, registering a CAGR of 1.31%.
  • Smartphones have emerged as India's fourth-largest export category, experiencing a 42% growth to reach US$ 15.6 billion in FY24.
  • The total number of active DTH subscribers rose from 65.25 million in the March 2023 quarter to 65.50 million in the June 2023 quarter.
  • The recent tariff hike by India’s direct-to-home (DTH) operators is likely to help them log a 6-8% growth in revenue to Rs. 19,500 crore (US$ 2.34 billion) in fiscal 2024.
  • The Indian room air conditioner market is projected to reach Rs. 50,000 crore (US$ 5.6 billion) by FY29.
  • Indian washing appliances current market size is US$ 3.76 billion which is expected to grow US$ 5.43 billion by 2029 with CAGR of 7.65%.
  • In first quarter of 2024, Smartphone shipments from India increased by 8% YoY reaching 35.3 million units, and value of the shipments is up by 18% YoY. It was primarily driven by healthy inventory levels and the low base of first quarter of 2023.
  • India’s Exports for Refrigerators, Air Conditioners, LEDs and Washing Machines amounted to Rs. 4,732.54 crore (US$ 571 million) in FY21. Refrigerator Market in India to increase to US$ 6.7 billion by FY26 from US$ 3.8 billion in FY21 at a CAGR of 9.5%.
  • India’s Imports for Refrigerators, Air Conditioners, LEDs and Washing Machines amounted to US$ 1.74 billion (Rs. 14,421.40 crore) in FY21. Air Conditioner Market in India to increase to US$ 9.8 billion by FY26 from US$ 3.8 billion in FY21 at a CAGR of 20.8%.
  • The White Goods market is estimated to cross US$ 21 billion by 2025 expanding at a CAGR of 11%. Domestic manufacturing contributes nearly US$ 4.6 billion on average to this industry.

Investments

June 2022, up from US$ 198 million in 2021. Between April 2000-March 2024, electronic goods attracted FDI inflows of US$ 4.83 billion.

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

  • Foxconn announced Rs. 1,200 crore (US$ 144 million) investment aims to enhance India’s manufacturing capabilities.
  • Vivo is set to commence production at its Rs. 3,500 crore (US$ 420 million) facility in Greater Noida.
  • Telangana’s homegrown company Resojet has entered into a memorandum of understanding with TCL for forging a joint venture and includes an investment of Rs. 225 crore (US$ 27.1 million). The joint venture will set up a consumer electronics manufacturing facility.
  • In FY23, India's exports of mobile phones doubled from Rs. 45,000 crore (US$ 5.45 billion) in FY22 to Rs. 90,000 crore (US$ 11.12 billion). India is the 2nd largest mobile manufacturer in the world.
  • In 2022-23 (April-November) the export of white goods are as follows:
    • refrigerators, freezers, and other refrigerating accounted for Rs. 116,223.32 lakh (US$ 140.97 million)
    • washing machines accounted for Rs. 35,819.59 lakh (US$ 43.33 million)
    • air conditioners accounted for Rs. 146,432.20 lakh (US$ 177.60 million)
    • electric lamps & Lighting fittings including tubes accounted for Rs. 160,750.62 lakh (US$ 194.97 million)

Government Initiatives

  • The Indian government distributed approximately Rs. 79 crore (US$ 9.51 million) in fiscal incentives under the Production Linked Incentive (PLI) scheme for white goods during the last quarter of FY24.
  • The PLI scheme for White Goods (ACs and LED lights) spanning FY 2021-22 to FY 2028-29 approves 64 applicants with a committed investment of US$ 814 million (Rs. 6,766 crore).
  • The Ministry of Consumer Affairs has asked top consumer durables companies (such as LG, Samsung, Havells, etc.) to share data in order to create a common repository of information on their service centres and repair policy in an effort to protect customers' rights to repair and maintain home appliances.
  • In November 2021, 42 companies were selected under the PLI Scheme for White Goods with a committed investment of Rs. 4,614 crore (US$ 580.6 million), which is expected to create additional direct employment for 44,000 people.
    • In April 2022, 19 companies filed applications for the PLI Scheme for White Goods in the 2nd round of applications, with committed investments of Rs. 1,548 crore (US$ 194.79 million).
    • As part of the PLI scheme, 61 companies have established component manufacturing facilities in 111 locations throughout 14 states and UTs, creating jobs across India.

Road Ahead

According to a number of consumer durable businesses, rural India presents the next significant growth potential for the industry, driven by increased penetration. The government's effort to electrify rural areas has improved power supply during the past few years in tier 3/4 towns and villages, paving the way for the use of electrical products.

According to FICCI, India’s TV production is expected to reach US$ 10.22 billion by FY26 at a CAGR of 20%. The headset market revenue in India is projected to reach US$ 77 million by 2027 at a CAGR of 4.7%, driven by rising adoption of wireless headsets among consumers. The dishwasher market in India is expected to surpass US$ 90 million by 2025-26, driven by rising demand from metro cities such as Mumbai, Hyderabad, Delhi and Bangalore. According to India Cellular & Electronics Association (ICEA), India has the potential to achieve a value of US$ 100 billion in manufacturing of laptops and tablets by 2025. The Indian mobile phone market is predicted to generate Rs. 2.4 trillion (US$ 29.38 billion) in revenue by FY26.

The Indian appliance and consumer electronics (ACE) market is expected to increase at 9% CAGR to reach Rs. 3.15 trillion (US$ 48.37 billion) in 2022. Demand growth is likely to accelerate with rising disposable income, easy access to credit, and wide usability of online sales.

  

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