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issue: July 2007 APPLIANCE Magazine

New Delhi Report
Digital Drive in India


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by Adite Chatterjee, India Correspondent

Immense changes are reshaping the nature of Indian consumer durables as digital technology is adopted on a large scale. Sales of computers, home theaters, cellular phones, and flat-panel TVs are growing rapidly. The country’s electronic equipment consumption, valued at US$28.2 billion in 2005, will grow to $126.7 billion by 2010 and to $363 billion by 2015, according to a Frost & Sullivan study commissioned by the India Semiconductor Association.

The cellular phone market exemplifies this trend. According to one estimate, 3 million new handsets are now being sold every month. Says Avijit Dutta, chief of Marcom Haier Telecom (I) Pvt. Ltd: “We will see stupendous growth in both new mobile connections and handsets until 2010, when we cover nearly 40% of the population [adding up to nearly 400 million handsets]. After that, handset renewals would be around 100 million handsets per annum.”

Though the demand for mobile phones is largely being met through imports, OEMs in India are expected to cash in on this opportunity soon.

In the home computer segment, PCs are emerging as entertainment devices. As a result, TFT monitors are increasingly the preferred display. Rajendra Kumar, executive vice president, HCL Infosystems Ltd., points out: “The growing adoption of digital devices like mobile/smart phones, digital cameras, [and] MP3 and MP4 players is forcing PCs to play the central role in digital lifestyles, and PCs are evolving to meet these new demands.”

Notebook PCs have emerged as a major driver of growth. In 2006, notebook PC shipments in India reached the 1 million mark, capturing a fifth of the total PC market in the country, and are growing at 104% over 2005. Research firm Gartner estimates that the PC market in India will grow at 20% in 2007, twice the growth of the global PC market.

In displays, sales of LCD and plasma TVs have grown at a fast clip. According to industry estimates, plasma TV sales have been growing at 166% annually and LCDs at 276%. Rising income levels and easy availability of credit facilities are ensuring that more and more of these products get into Indian homes.

Personal electronics, such as cellular handsets, may well fuel growth in this sector, rather than traditional durables such as washing machines. However, air-conditioners are also expected to be a new growth driver among appliances, thanks largely to the real-estate boom taking place across many cities in India. According to Consumer Electronics & TV Manufacturers Association (CETMA), air- conditioner sales will grow 20% this year, higher than the expected growth rates of other consumer durables such as washing machines (10–12%), refrigerators (8%), or even TVs (12–15%).

Another potential opportunity for the OEM sector is the growth of organized retailing in the country. But industry sources point out that if India’s manufacturers are to shift gears and compete effectively with China, the government must create more-pro-industry policies.

Haier’s Dutta says: “Every sector has benefited from proactive government policies. Mobile telephony really took off when the ‘calling party pays’ clause came into existence. The industry associations need to further these causes and the entrepreneurial spirit of India will ensure that we fly.”

 

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