issue: March 2006 APPLIANCE Magazine
New Delhi Report
Sustained Growth in India
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by Adite Chatterjee, India correspondent
A new study by the Federation of Indian Chambers of Commerce (FICCI) released in November 2005 highlights growth trends in the consumer durables sector during the period of April 2004 through March 2005.
The report suggests that growth of the Indian economy, at 7 percent per year, will lead to growth of the sector during the 2005/2006 period as well.
Several key trends are identified as shaping the Indian consumer durables markets. With economies of scale coming into play, the price difference in the case of branded and unbranded products has narrowed. With branded players offering better support and sales service, consumers no longer prefer unbranded products.
Multinational companies have gained an edge over Indian players in technology, as well as having an assured and steady flow of capital. The domestic companies have an array of well-known brands, extensive distribution networks and a better understanding of consumer habits and preference.
Demand for consumer durables continues to be a seasonal phenomenon, with heavy purchases being made during the harvest, festive and wedding seasons-from April to June and from October to November in the northern parts of India, and October to February in the southern parts of the country.
The FICCI study shows that the segments that have recorded the best growth rates in terms of sales volumes in the last year are:
• window air-conditioners - 25 percent sales volume growth
• split-system air-conditioners - 42.6 percent
• microwave ovens - 27.3 percent
• DVD players - 25 percent
• VCD/MP3 players - 20 percent
• color TVs - 12 percent
• washing machines - 18.1 percent
• frost-free refrigerators 13.8 percent
• direct cool refrigerators - 2.8 percent
In terms of production volumes, changes included:
• refrigerator production increased from 3.7 million units in 2003-2004 to
3.9 million units in 2004-2005
• air-conditioner production rose from 980,000 units in 2003-2004 to
1.2 million units in 2004-2005
• washing machine production rose from 1.35 million units in 2003-2004
to 1.6 million units in 2004-2005
• color TV set production rose from 8.25 million in 2003-2004 to
9.25 million units in 2004-2005
• VCD/MP3 players production rose from production rose 20 percent to
8.4 million units in 2004-2005
The study points out that import duties are still very high for consumer durables, in the range of 35 percent to 40 percent. Reduction in import duties, however, could drive a spurt in sales of products such as microwave ovens, which is currently a small market. Lowering import duties would also have a positive impact, as it would lower input costs for washing machines and refrigerators.
The FICCI study estimates that production growth in 2005-2006 will be:
• refrigeration - 5 percent to 10 percent
• air-conditioners - 20 percent to 25 percent
• washing machines - 5 percent to 10 percent
• microwave ovens - 25 percent
• color TVs - 15 percent to 20 percent
• DVD players - 25 percent
• VCD/MP3 players - 30 percent