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Consumer Durables
The industry is expected to generate 5 lakh new employment opportunities and achieve cumulative foreign exchange inflows worth US$ 75 billion and investments of >US$ 1 billion by 2025.

Indian Consumer Market

    Last updated on Jan, 6 2021

Indian Consumer Durables Industry Report  (Size: 763.31 KB ) (November, 2020)

Introduction

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 income.

Market Size

  • Appliances and consumer electronics industry is expected to double to reach Rs. 1.48 lakh crore (US$ 21.18 billion) by 2025.
  • Electronics hardware production in the country increased from Rs. 4.58 trillion (US$ 65.53 billion) in FY19 to Rs. 5.46 trillion (US$ 73 .78 billion) in FY20.
  • In FY20, TV penetration in India stood at 69%, driven by the DTH market. The total count of DTH subscribers in the country stood at 70.58 million in the country in 2020.
  • As of FY20, electronics, domestic appliances and air conditioner market in India were estimated to be around Rs. 5,976 crore (US$ 0.86 billion), Rs. 17,873 crore (US$ 1.80 billion) and Rs. 12,568 crore (US$ 2.56 billion), respectively.
  • Smartphone shipments in India increased eight% y-o-y to reach 152.5 million units in 2019, thereby making it the fastest growing among the top 20 smartphone markets in the world.
  • 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.

Investments

According to Department for Promotion of Industry and Internal Trade, between April 2020 and October 2020, exports of electronic goods from India stood at US$ 5.05 billion.

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

  • In November 2020, Saudi Arabia's Public Investment Fund invested Rs 9,555 crore (US$ 1.29 billion) in Reliance Retail, taking the total fundraise in the last two months to Rs 47,265 crore (US$ 6.37 billion).
  • In November 2020, three private equity funds—Investcorp, Norwest Venture Partners and Gaja Capital together invested ~Rs. 800 crore (US$ 110 million) to acquire ~ 31% stake in Xpressbees, the e-commerce focussed end-to-end supply chain solutions provider.
  • In November 2020, Pegatron Corp., an iPhone assembler in Taiwan, announced its plans to invest US$150 million in building a plant in India.
  • In October 2020, the Karnataka government approved a Rs. 3,540 crore (US$ 482.63 million) investment by Aequs SEZ Private Limited to develop a consumer electronics and durables goods (CEDG) cluster in Hubballi—about 430 kms from Bengaluru.
  • In October 2020, Amazon India launched new specialised fulfilment centre with a storage capacity of 1.2 million cubic feet in Bengaluru, which is specialised to store and manage customer orders from the large consumer appliances and furniture categories in their portfolio.

Government Initiatives

  • The Government of India has allowed 100% Foreign Direct Investment (FDI) under the automatic route in Electronics Systems Design and Manufacturing sector. FDI into single brand retail has been increased from 51% to 100%; the government is planning to hike FDI limit in multi-brand retail to 51%.
  • In September 2020, the Government of India planned to offer production-linked incentives worth Rs. 1.68 trillion (US$ 23 billion) to companies such as consumer appliance, automobile and solar panel to attract companies to establish manufacturing plants in India.
  • On November 11, 2020, Union Cabinet approved the Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.
  • Mobile phone exports in India are expected to reach a record of US$ 1.5 billion in 2020, of which 98% are expected to be smartphones.
  • The PLI scheme, which has been approved for 16 electronics firms, including 10 manufacturers of mobile handsets, would further improve India's role in the global mobile market and complement the goal of making the country a global mobile production hub for manufacturers.

Road Ahead

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 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 for November 2020 is Rs. 1 = US$ 0.013

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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