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issue: January 2004 APPLIANCE Magazine

New Delhi Report
Indian Sales Increasing Due to Growing Market


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A report filed by Adite Chatterjee, New Delhi correspondent, APPLIANCE magazine.

There is plenty of good news for manufacturers of appliances and other household products. This year, the festive season started off with a bang.

In the month of October alone, consumer durable companies recorded sales of Rs 2.5 billion (U.S. $56 million). And with more than 14,000 marriages scheduled to take place in Delhi alone during the auspicious Hindu wedding season, which falls in the month of December, the dream run for consumer durable sales is likely to continue.

Better still, the Indian consumer market is growing at a fast rate. According to research by the National Council for Applied Economic Research (NCAER), between 1996 to 1997 and 2000 to 2001, per capita income grew by a compounded annual rate of 3.2 percent. High-income households grew at a must faster rate - by almost 20 percent year on year - between 1995 to 1996 and 1998 to 1999. Upper middle-income households grew by 10 percent on a compounded annual growth basis during that period. This has translated into a greater penetration of consumer durable products such as appliances. According to NCAER, the top 41 million affluent households in India - of which 24 million are in urban India and 17 million in rural India - are the biggest buyers of consumer durables.

Consider some figures of consumer durable ownership in urban India:

  • In the top 5 million households, in affluence terms, 96 percent of households have color televisions, 82 percent own refrigerators, and 44 percent own washing machines.
  • In the next 7 million households, penetration of color TVs is 69 percent, 58 percent for refrigerators, and 19 percent for washing machines.
  • In the next tier of affluent households - numbering approximately 12 million - 50 percent own color TVs, 35 percent own refrigerators, and 8 percent own washing machines.

Clearly, the figures show that there is scope for marketers to increase the penetration of their products among households with the purchasing power. NCAER estimates that the total number of urban households will increase from 49 million to 60 million by 2006 to 2007. The number of urban households in the high-income group will increase by 8.6 million by the year 2006 to 2007, and by 7.3 million in the upper-middle-income group. The middle-income group households will increase by 4.3 million, and the bottom two income groups will decline by about 2.3 million and 7.5 million, respectively.

Rural India too is set to see an increase in the number of high-income households. An additional 4.6 million high-income households and 13 million middle-income households by 2006 to 2007 will take the number of rural households from 122.8 million to 139 million.

This constitutes a huge opportunity for marketers - 60 million households or 300 million consumers with the capacity to buy consumer appliances and other products is an attractive market for any global player. And it seems that global appliance players who have established brands in the Indian market are likely to benefit from this great big push towards consumerism.

 

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