After witnessing lower growth following the COVID-19 pandemic, the consumer durables and electronics industry has returned itself to growth. The summer season of 2022 and 2021 sees a positive trend for the industry.
Home appliances and electronics saw a pick-up in demand as consumers stayed indoors.
As per the Crisil analysis for September 2022, in the last financial year the consumer durables industry crossed the pre-pandemic mark in terms of value; It will exceed the pre-pandemic volume mark by ~3% this fiscal.
Its revenue will grow by 15-18% to Rs 1 lakh crore in the current financial year, which will be led by 10-13% growth in volumes.
The analysis said demand would be driven by both urban and rural sectors, though rural demand would pick up in the second half of the fiscal.
As the Union Budget 2023-24 will be presented soon, the industry is optimistic about the prospects of the sector and has been demanding some measures from Finance Minister Nirmala Sitharaman to push growth.
Manish Sharma, Chairman, Panasonic Life Solutions India, FICCI Committee on Electronics & Manufacturing said the budget is being presented at a critical juncture when the global economy is reeling under geopolitical uncertainties, rising inflation and slowing growth . Calculative action to strengthen domestic sources of growth is necessary to maintain the current path of steady economic growth in the country.
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The industry feels that the government remains committed to introducing and implementing reforms leading to ‘Ease of Doing Business’, focusing on encouraging investments to build. India ‘Self-reliant’ by aggressively promoting ‘Make in India’ initiative.
Sharma said in this backdrop, the industry expects the Union Budget to include reforms that encourage consumption and improve consumer demand.
Kamal Nandi, Business Head and Executive Vice President, Godrej Appliances, said, “The large appliance industry continues to suffer from low penetration levels in India, despite its positive impact on quality of life and productivity. In addition, last year saw stagnation in high volume large segments due to prevailing economic conditions and low consumer sentiment among the middle class apart from continued cost impact on the industry due to commodity, currency and regulatory norms.”
“In this context, lower GST on appliances will help,” urged Nandi.
Like Shamra, Nandy also urged the government to consider a big stimulus to increase spending to the middle class and lift the overall economy, which would benefit multiple sectors.
A strong component eco-system will help the industry, Nandi said. He added, “We also recommend zero duty under IGCR for all inputs (components and goods) used in the manufacture of parts such as motors, compressors, timers, etc. It is recommended to introduce tariff barriers, such as in air conditioners (ACs).
Sharma also urged the government to consider rationalizing tax rates on some consumer durable electronics such as ACs and televisions (TVs).
He said that these are no longer a ‘luxury’ item and have become common and essential household items. The energy efficiency of air-conditioners has steadily increased, and they now offer additional features such as air purification, which is important in urban areas.
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The low-access AC segment will be a major growth driver for the industry. Crisil’s analysis states that the demand for ACs and refrigerators is increasing due to changing weather patterns.
Sharma urged that the reduction in the tax slab from 28% to 18% would help in relieving the pricing pressure and rising demand for both ACs (split and window) and televisions (above 105 cms), thereby increasing the demand among consumers. Will improve affordability, attract investment in component manufacturing, and help in deeper market penetration especially for the AC category.
For manufacturers, Sharma welcomed reforms such as the Production Linked Incentive (PLI) scheme as it furthers the government’s intention to spur domestic manufacturing while promoting healthy backward integration and elevating India’s status as a global manufacturing hub. displays the
As a next step towards indigenization of REF, RAC, and components of LCD/LED TVs under Phased Manufacturing Program (PMP) scheme, he asked the industry administration to simultaneously increase the import duty on components (back cover) Will hope sheet, bezel, refrigerator motor, room ac (FG), etc.) from time to time to provide incentives to local manufacturing units. For example, increase the basic customs duty (BCD) on refrigerator motors from the existing 10% BCD to 22% (over a period of 4 years).
“Furthermore, under the Remission of Duties and Taxes on Export Products (RoDTEP) scheme to be implemented from January 1, 2021 to 2025, we encourage the government to consider extending the benefit on export of goods under the mentioned scheme at 5% will do. on FOB (free-on-board) value to ensure that exporters get incentives on embedded taxes and duties, which were non-recoverable earlier,” he said.
Last year, industry body CEAMA had said that the Indian appliances and consumer electronics (ACE) market is expected to nearly double in the next three years to around Rs 1.48 lakh crore by 2025, owing to rising domestic demand.
Foreign direct investment in the ACE industry is also set to almost double to $481 million by June in 2022, compared to $198 million in 2021.
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