Overview

The consumer durables industry is one of the most dynamic and

fastest growing industries in India and is considered to be one of

the largest in the world. Indian Consumer Durables sector is vast

in scope – including a range of household and industrial

electronics – air conditioners, televisions, washing machines,

refrigerators, air coolers, laptops and personal computers and a

wide range of other household/domestic appliances &

conveniences. Approximately over 65% of the total revenue for

the sector is generated from the urban population and the rest

from rural India.

The consumer durable market, has in the past registered strong

growth of about 16.3% CAGR between FY12 and FY17 to cross Rs

1 trillion (US $ 15.5 billion) in FY17 (IBEF estimate). In FY17 alone,

the industry registered a growth of about 24% y-o-y. However

exports of major durables registered a decline of over 11% y-o-y

during the year. Also, in FY18, consumer electronics exports from

India reached Rs 2,334 crore vis-à-vis Rs 3,913 crore during the

same period last year registering a decline of over 40%. The

consumer durables index (which has a broader set of

commodities include including some automobiles) under the

Index of Industrial Production (IIP) grew 8.6% in FY18 (Apr-Feb)

vis-à-vis a 0.1% growth registered during the same period last

year.

Outlook:

Historically, growth in consumer durables has closely related with

the growth in GDP. Going forward, as country’s GDP is expected

to improve to 7.5% in FY19 (CARE Ratings expectations) from

6.6% in FY18, we expect the consumer durables market to

register growth of about 6.5-8.5% on back of improvement in

domestic consumption.

Government’s focus on Housing for all, rural electrification,

Power For All with the objective to make affordable housing and

power available to all and facilitate 24X7 power supply is

expected to be one of the key drivers for strong growth in the

consumer durables industry. Also, with growing awareness,

easier access to credit, improving standard of living and

changing lifestyles, higher disposable incomes and normal

monsoon expected during the year, the consumption of durables

is expected to register growth going forward.

May 7, 2018 I Industry Research

Consumer Durables

Industry - Structure &

Prospects

Contact: Madan Sabnavis Chief Economist madan.sabnavis@careratings.com 91-22-67543489

Darshini Kansara

Research Analyst darshini.kansara@careratings.com 91-22-6754 3679

Mradul Mishra

mradul.mishra@careratings.com 91-022-6754 3515

Disclaimer: This report is prepared by CARE Ratings Ltd. CARE

Ratings has taken utmost care to ensure accuracy and objectivity

while developing this report based on information available in

public domain. However, neither the accuracy nor completeness of

information contained in this report is guaranteed. CARE Ratings is

not responsible for any errors or omissions in analysis/ inferences/

views or for results obtained from the use of information contained

in this report and especially states that CARE Ratings has no

financial liability whatsoever to the user of this report.

Industry Research I Consumer Durables – May 2018

2

Overview

Consumer Durables are a category of consumer products that do not wear out quickly and have to be purchased

frequently because they are made to last for an extended period of time (typically over 3 years). The consumer durable

goods can be broadly classified under 2 categories shown below:

Chart 1: Consumer Durables Industry in India

Source: IBEF, Industry

Under consumer appliances/domestic appliances, the industry is further classified under ‘White goods’ and ‘Brown goods’.

White goods are large household appliances that mainly include Air Conditioners, Washing machines and Refrigerators and

other kitchen appliances while the brown goods have mostly kitchen appliances and other cooking range products.

Consumer Electronics are equipment intended for routine use, most often in entertainment, communications

and workplace productivity.

Consumer Durables

1. Consumer Appliances

A. White Goods

- Washing machines

- Refrigerators

- Air conditioners

B. Brown Goods

- Microwave ovens

- Cooking range

- Mixers & Grinders

- Juicers

- Irons

- Blenders

- Toasters

- Coffee makers

- Sewing machines

- Electric Fans

- Cleaning equipments

- Dryers

- Heating appliances

- Dishwashers

- Vacuum cleaners

- Water coolers

- Water purifiers

- Other Domestic Appliances

2. Consumer Electronics

- Televisions & Home theatre systems

- Audio & Video systems

- Personal computers & peripherals

- Digital Cameras

- Mobile Phones & accessories

- Laptops & accessories

- Tablets

- Gaming Consoles

- DVD & MP3 players

- Audio equipments

- Speakers

Industry Research I Consumer Durables – May 2018

3

Some of the key consumer durables brands in India are: Whirlpool, Blue Star, Carrier, Godrej India, Bajaj Electricals, Orient,

Philips, Samsung, Sony, Hitachi India Limited, Sharp India Limited, Tata, LG, Onida, Toshiba India Private Limited, Videocon,

and Voltas etc.

Note: For analysis purposes, CARE Ratings has excluded consumer durables such as readymade garments, kitchenware like

vessels, automobiles, gold and diamond gems & jewellery, stationery items, footwear, etc that is covered by the Ministry of

Statistics and Programme Implementation in the Index of Industrial Production (IIP). CARE Ratings reference to consumer

durables includes goods that generally are associated with use of electricity.

Major players in the Industry

Player Product range

BlueStar ACs, refrigerators, specialty cooling products including mortuary chambers and cold storage

Daikin ACs and cooling equipment

Godrej Refrigerators, ACs, washing machines, microwave ovens, DVD players, digital-imaging products and audio-visual products

Hitachi ACs and refrigerators

LG TVs, audio-visual solutions, computers, mobile phones, refrigerators, washing machines, microwave ovens, vacuum cleaners and ACs

Onida LCDs, washing machines, DVD players, ACs, microwave ovens, mobile phones, projectors and display products

Philips TVs, home theatre systems, DVD players, audio products, personal care products, household products, computers and phones

Samsung TVs, home theatre systems, DVD players, mobile phones, digital cameras, camcorders, refrigerators, ACs, washing machines, microwave ovens and computers

Sony TVs, projectors, DVD players, audio systems, home theatre systems, digital cameras, camcorders, computers, video-gaming products and recording media

Videocon TVs, DVD players, microwave ovens, refrigerators, washing machines, ACs and power backup solutions

Whirlpool Refrigerators, washing machines, microwave ovens, water purifiers and power backup solutions

Industry Research I Consumer Durables – May 2018

4

Production of Consumer Durables

1. White Goods

Chart 2: Production of White Goods (000 Numbers)

Source: CMIE

Table 1: Growth rates – Production of white goods (%)

Refrigerators Air Conditioners Washing & Laundry

Machines

2012-13 12.2 -8.5 17.0

2013-14 -4.2 16.4 24.2

2014-15 12.2 26.5 14.4

2015-16 -0.8 -2.0 10.3

2016-17 10.1 10.9 13.2

2016-17 (Apr-Feb) 11.7 12.8 12.6

2017-18 (Apr-Feb) 3.0 4.9 5.1

Source: CMIE

The production of white goods over the last 5 years has shown inconsistent growth rates. While the demand for

refrigerators and air-conditioners depend mainly on the weather, demand for washing and laundry machines depends on

the level of disposable income in the households. In FY18, with near normal monsoon in the country, the demand for

refrigerators and air-conditioners remained subdued.

In terms of ACs, of the total consumption, imports stand at about 45-50% annually while exports remain negligible. For

Refrigerators, imports form a marginal 1-2% share of the total consumption of the country and the exports form a small

share of about 4-6%.

11

,11

8

10

,65

4

11

,95

3

11

,85

9

13

,05

2

11

,53

8

11

,88

2

2,3

26

2,7

07

3,4

23

3,3

54

3,7

21

3,0

48

3,1

97

3,3

41

4,1

51

4,7

48

5,2

38

5,9

31

5,5

15

5,7

94

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2012-13 2013-14 2014-15 2015-16 2016-17 2016-17(Apr-Feb)

2017-18(Apr-Feb)

Refrigerators Air Conditioners Washing & Laundry Machines

Industry Research I Consumer Durables – May 2018

5

2. Brown Goods

Chart 3: Production of Major Brown Goods (000 Numbers)

Source: CMIE

Table 2: Growth rates – Production of brown goods (%)

Fans (00000 Nos)

Electric cooking appliances

Electric water heaters

Electric Filament type lamps

2012-13 (15.4) (16.3) 8.8 9.1

2013-14 0.7 0.1 13.7 45.8

2014-15 15.6 36.4 (9.6) 3.1

2015-16 8.0 143.7 (15.3) (22.8)

2016-17 0.3 (60.1) (48.8) 12.8

2016-17 (Apr-Feb) 2.4 (61.4) (50.8) 16.2

2017-18 (Apr-Feb) (5.4) 19.0 (33.3) (8.4)

Source: CMIE

Key Product Update

A. Consumer Electronics:

Colour TVs (CTVs)

- CTVs are the largest contributors to the consumer electronics segment

- India’s television industry stood at US$ 9.23 billion in 2016, exhibiting a y-o-y growth of 11.5% in 2016 over US$

8.28 billion in 2015

21

0

21

2

24

5

26

4

26

5

-

23

9

22

6 1

,25

2

1,2

54

1,7

11

4,1

68

1,6

62

1,5

64

1,8

61

34

9

39

7

35

9

30

4

15

6

14

1

94

70

0 1,0

20

1,0

52

81

2

91

6

84

9

77

8

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2012-13 2013-14 2014-15 2015-16 2016-17 2016-17(Apr-Feb)

2017-18(Apr-Feb)

Fans (00000 Nos) Electric cooking appliances

Electric water heaters Electric Filament type lamps

Industry Research I Consumer Durables – May 2018

6

- Rural farm incomes, rural electrification programme would be major demand drivers for TVs in the country

Flat Panel Display

- The production of LCD/LED TVs rose to 12 million valued at US$ 3.3 billion in FY16 from 8.8 million valued at US$

2.5 billion in FY15. India’s first LCD manufacturing unit is set to start in 2018

- Currently all the displays used are imported to India

- The market for flat panel displays in India was estimated at 261 million units in 2016.

- The price decline on account of relatively low import duty on LCD panels, high penetration and the introduction of

smaller entry-size models have been key growth drivers in the segment

- Government schemes such as Housing for All (PMAY), Power for All (Saubhagya Scheme) is expected to drive sales

for the segment

Direct-To-Home (DTH)

- With expansion of the DTH (Direct-to-Home) and introduction of the Conditional Access System (CAS) in metros ,

the Set-Top Box (STB) market is growing at a rapid pace

- As per Trai, DTH net active subscriber base in India reached 67.56 million as of December 2017, registering a y-o-y

growth of about 7.8% thereby making India one of the world’s largest DTH market

B. Consumer Appliances

Refrigerators

- Refrigerators makes up 27% of the consumer appliances market

- Direct cool category constitutes 75% while frost free segment stands at about 25% of the total market share

- The estimated market size of Refrigerators in volume terms is over 10 million units as of FY17 while in value terms,

it is Rs 195 billion (US$ 3.02 billion) as of 2017.

Air Conditioners (ACs)

- During FY17, market size for air conditioning in India was valued at Rs 18,500 crore (US$ 2.76 billion), while the

market for room air conditioners was valued at around Rs 12,000 crore (US$ 1.79 billion).

- ACs are perceived as premium products

- Improving standard of living, easy access to credit and higher disposable income is driving demand for ACs in the

country

Washing Appliances

- As of FY17 the market size is close to 6 million units

- Competitive prices and higher disposable incomes have led to increase in the market share of fully automatic

washing machines

Electric Fans

- Domestic electric fan market in India has continued to register marginal y-o-y growth in terms of volumes.

However, production of fans registered a CAGR growth of about 1.3% during FY12 and FY17 period indicating a

slow growth. In FY18 (Apr-Feb), production of fans registered a decline of about 5.4% on a y-o-y basis.

Industry Research I Consumer Durables – May 2018

7

- Penetration of electric fans in rural areas is expected to cross 70% mark by 2019-20 from 65% in 2017 on back of

various government initiatives like Rural Electrification and Housing for All thereby reviving the demand for fans in

the country.

Electric Cooking appliances & water heater

- Electric cooking appliances registered a growth of about 19% after a sharp decline of over 60% y-o-y in FY17 while

the electric water heater segment has been in the negative territory since FY15. Lack of support infrastructure in

the rural areas and absence of new households being electrified are the major reasons for this decline. Also,

monsoon and farm incomes have a bearing on the demand for cooking appliances and water heaters.

For consumer appliances, easy financing options, Housing for all, nuclear families, higher farm incomes and rural

electrification schemes for rural populace, etc are the major demand drivers among other factors.

Demand Drivers

1. Rapid urbanization

- A majority of India still lives in ‘villages’. This statement no doubt holds true but the figures suggest that there has

been a paradigm shift of the Indian populace in terms of rural–urban divide. The aspirations of higher income,

higher standard of living etc. has drawn more and more people from villages to settle in towns and cities.

- This transition from rural to urban areas has led to an increase in the demand for goods (owing to higher income

and ever-expanding needs). The consumer durables manufacturers are therefore targeting the ‘middle class’

populace by ensuring the availability of varied products at various price ranges to match the needs of a ‘common

man’.

Chart 4: Population Division – 2017 E

Source: Census, CIA - The World Factbook

2. Rising income levels & growing per capita expenditure

- In the last decade, Indian economy has progressed rapidly. Correspondingly, India’s per capita GDP has gone up

from Rs 80,518 in FY13 to Rs 127,292 in FY18 at a CAGR of 9.6% fuelling a consumption boom in the country.

- Correspondingly, the per capita personal disposable income surged from Rs 82,408 in FY13 to Rs 128,894 in FY18

at a CAGR of 9.4%. Also, the per capita private final consumption expenditure too rose from Rs 45,461 in FY13 to

Rs 74,915 in FY18 at a CAGR of 10.5%. The growth in country’s per capita GDP in turn has increased the disposable

income of the populace ultimately driving the country’s consumption.

19.9 23.2 25.7 27.8 31.2 33.5

80.1 76.7 74.3 72.2 68.8 66.5

0

20

40

60

80

100

1971 1981 1991 2001 2011 2017 E

Urban Population Rural Population

Industry Research I Consumer Durables – May 2018

8

Chart 5: Per capita indicators (Rs at current prices)

Source: CMIE, Central Statistics Office (CSO)

3. Growing spread of plastic money & easy availability of credit

- The growing use of ‘plastic money’ i.e. credit and debit cards has resulted in an increased spending amongst the

consumers thereby fuelling the demand in the durables sector. With the acceptance of plastic money by almost all

the retailers in the organised segment, the number of outstanding plastic cards in the country is on a rise. The

incentives such as cash-back offer or discounts on selected sales linked to the plastic money have lured the Indian

consumer to experience the pleasure of ‘cashless shopping’. Also, with year round discounts on e-commerce,

reduced tax rates and advancements in technology at lower costs, demand is further expected to get a boost.

Chart 6: Debit & Credit card usage trend (000 numbers)

Source: Reserve Bank of India

80

,51

8

89

,79

6

98

,40

5

10

7,2

80

11

7,4

27

12

7,2

92

45

,46

1

51

,76

4

57

,20

1

63

,06

5

69

,32

2

74

,91

5

0

20,000

40,000

60,000

80,000

100,000

120,000

140,0002

01

2-1

3

20

13

-14

20

14

-15

20

15

-16

20

16

-17

20

17

-18

Indian GDP Per capita Per capita PFCE

82

,40

8

91

,84

3

10

0,4

39

10

9,2

54

11

8,9

90

12

8,8

94

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

20

17

-18

Per capita GNDI

5,9

72

,53

2

6,9

06

,84

8

7,8

03

,73

3

9,2

46

,15

3

10

,96

2,3

60

9,9

81

,07

9

10

,80

3,8

29

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

20

16

-17

(A

pr-

Feb

)

20

17

-18

(A

pr-

Feb

)

Debit Card Transactions

39

9,2

30

50

2,8

52

61

9,4

27

79

1,6

50

1,0

97

,51

6

99

1,1

28

1,2

84

,65

4

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

20

16

-17

(A

pr-

Feb

)

20

17

-18

(A

pr-

Feb

)

Credit card Transactions

Industry Research I Consumer Durables – May 2018

9

Chart 7: Deployment of Gross Bank Credit – Personal loans for consumer durables (Rs Billion)

Source: Reserve Bank of India

4. Changing face of Indian consumerism – from necessities to luxury (Brand consciousness)

- With rise in income level of Indian populace and increase in plastic money, discretionary spending has become

important. As a result, most of the durable goods such as ACs and refrigerators that were considered to be luxury

before are now considered to be a necessity. Private Final Consumption Expenditure (PFCE) on consumer durables

grew at CAGR of over 10% between FY12 and FY17.

Chart 8: PFCE on Durable Goods (Rs Million)

Source: CMIE

5. Rising growth in number of nuclear families

- The rapid growth of population, increased urbanisation and the unavailability of large real estate spaces have led

to the growth of nuclear families in the country. The average number of person per household has reduced from

5.6 in FY81 to 4.9 in FY11.

- The growing number of households has not only pushed the demand for necessities but the combined mix of

greater purchasing power and willingness to spend has resulted in the nuclear family’s shifting focus towards

luxury/semi-luxury products. This has thus led to higher demand for durables in the country.

128

153

178

208 197

0

50

100

150

200

250

FY14 FY15 FY16 FY17 FY18

1,5

13

,21

0

1,7

67

,84

0

1,8

39

,02

0

2,1

32

,90

0

2,2

52

,97

0

2,4

51

,34

0

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Industry Research I Consumer Durables – May 2018

10

Chart 9: Trends in family size Chart 10: Growth in population and density

Source: Census of India

6. Policy support

- Setting up of Electronic Hardware Technology Parks (EHTPs) by State or the Central government, public or private

sector undertaking that are administered by the Ministry of Communications and Information Technology. Foreign

investment up to 100% is allowed in India, subject to sectoral norms along with various other benefits such as

income tax reliefs, duty waivers, etc. for local manufacturing

- Increasing liberalisation and easing FDI norms

- Policies like National Electronics Mission and Digitisation of television and reforms like introduction of labour laws

and TUFS

- Power for All (Saubhagya Scheme) - Rural electrification

7. Investment environment

- Expanding production and distribution facilities in India by many domestic and foreign players led by

favourable investment environment

- Increased R&D spends by government along with increasing rural jobs

- Providing support from India to global projects

5.6 5.5

5.4

4.9

4.4

4.6

4.8

5

5.2

5.4

5.6

5.8

FY81 FY91 FY01 FY11

Persons per household (Nos.)

683

846

1,029

1,210

230 273 325

382

-

200

400

600

800

1,000

1,200

1,400

FY81 FY91 FY01 FY11

Population (million) Density (per sq. km)

Industry Research I Consumer Durables – May 2018

11

Financial Performance

The financial performance of the consumer durables industry in India has been analysed for air-conditioner, domestic

appliances and electronics players in the country.

Table 3: Financials of Consumer Durables – 9 Months (Apr-Dec) (Rs crore)

Category Net Sales Net Profit Operating Profit Operating Margin (%)

Net Margin (%)

FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18

A. Air conditioners 9,844 10,199 521 1,240 949 894 9.6 8.8 5.3 12.2

B. Domestic appliances

14,652 15,065 570 751 1,420 1,548 9.7 10.3 3.9 5.0

C. Electronics 3,422 3,032 18 39 292 278 8.5 9.2 0.5 1.3

Consumer Durables (A+B+C)

27,918 28,296 1,109 2,029 2,661 2,720 9.5 9.6 4.0 7.2

Source: AceEquity

Note: For ACs - financial results of 5 listed Air conditioner players, for domestic appliances - financial results of 14 listed domestic

appliance players while for electronics – financial results of 10 listed electronics players has been considered

- Net sales of consumer durables registered only a marginal increase of 1.4% y-o-y in FY18 (Apr-Dec) over a 15%

growth registered last year during the same period, with air-conditioners sales registering a slower growth of

about 13.7% y-o-y (27.8%), domestic appliances sales growing by just about 2.8% y-o-y (20.9%) and sales of

electronics registering a decline of about 11.4% y-o-y (1.2%).

- Operating profits increased by a marginal 2.2% in FY18 (Apr-Dec) vis-à-vis a sharp 22.2% increase registered last

year. Operating profits were skewed by the weak performance of air-conditioners and electronics segment players

during the period. However, domestic appliances players registered a growth, however, lower, of about 9% as

compared with a growth of 16.3% increase in FY17 (Apr-Dec)

- However, contrary to sales and operating profits, net profits have recorded a sharp increase of over 80% during

the period led by performance of air-conditioner players and electronics players, where profits doubled in FY18

(Apr-Dec) period. Also, domestic appliances registered growth of about 33% y-o-y during the period. Lower

depreciation and interest costs supported the net profits growth of durables players.

- Operating margins remained largely stable at 9.6% in FY18 (Apr-Dec) compared with same period last year.

Operating margins of domestic appliances players and electronics players expanded by about 60 basis points

respectively while margins of AC players contracted by about 90 basis points during the period.

- Net margins of consumer durables expanded by over 300 basis points led by an expansion of about 700 basis

points in margins of AC players followed by over 100 basis points expansion in margins of domestic appliances

players and about 75 basis points expansion in margins of the electronics players.

Industry Research I Consumer Durables – May 2018

12

Investments

According to the data released by the Department of Industrial Policy and Promotion (DIPP), the electronics sector attracted foreign direct investment (FDI) worth US$ 1.84 billion between April 2000 and December 2017. Following are some recent investments and developments in the Indian consumer market sector.

A. Chinese phone manufacturer, Xiaomi Corporation, is planning to invest about US$ 1 billion in 100 Indian start-ups

over the coming five years, with an aim to make an ecosystem of apps surrounding its smartphone brand.

B. Japan-based imaging major, Nikon, expects India to be one of its top five markets in the world over the coming 3-4

years as it retains its lead in the DSLR segment and expands its retail presence in India by adding 10-15 Nikon

Experience Zone stores.

C. Intex Technologies will invest around Rs 60 crore (US$ 9.27) in 2018 in technology software and Internet of Things

(IoT) startups in India in order to create an ecosystem for its consumer appliances and mobile devices

D. In May 2017 Havells completed acquisition of Lloyd consumer durables business for an enterprise value of Rs

1,600 crore (US$ 248.2 million)

E. In January 2018, Panasonic started its first refrigerator plant in India with an annual production capacity of 500,000

units with an investment of Rs 115 crore (US$ 17.76 million).

F. In August 2017, V-Guard acquired 49.43 per cent stake in GUTS Electro-Mech

G. In October 2017, Flipkart launched its private label ‘Marq’ for selling large appliances in India.

Source: IBEF, Industry

Duties & Taxes

A. Goods and Services Tax (GST)

With the implementation of the GST from July 1, 2018, the tax rates of various durables has seen varied movements. While

major consumer durables (ACs, refrigerators and washing machines) are included in the highest tax slab of 28% (durables

considered to be a luxury category), several other consumer goods currently fall under the 18% bracket.

Table 4: GST rates of major consumer durables

Product Rate

Refrigerators, freezers and other refrigerating or freezing equipment, electric or other 28%

Air-conditioning machines 28%

Household or laundry-type washing machines 28%

Computer monitors not exceeding 20 inches, Set top Box for Television (TV) 18%

Digital cameras and video camera recorders other than CCTV 28%

Telephones for cellular networks or for other wireless networks 12%

Mobile Phones 18%

Wrist-watches, pocket-watches and other watches 18%

Industry Research I Consumer Durables – May 2018

13

Video games consoles and Machines 28%

Electric instantaneous or storage water heaters and immersion heaters 28%

Stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas-rings, plate warmers and similar non-electric domestic appliances, and parts thereof, of iron or steel

18%

Electro-mechanical domestic appliances 28%

Source: CBEC

- The consumer durables industry has urged the government to look into the revision of rates to 18% for all

appliances and consumer durables to boost demand in the country.

B. Import Duty

In order to give a push to the ‘Make in India’ initiative and curb the rising imports, the government recently (December

2017) increased basic customs duty on major electronic goods.

Table 5: Change in customs duty of major consumer durables

Category Old Rate (%) New Rate (%)

Microwaves, ovens 10 20

Mobile phones, smartphones 10 15

TV cameras, digital camera etc 10 15

CCTV/IP camera 10 15

TV sets 10 20

LED lamps 10 20

Electricity meters 10 15

LCD/LED/OLED/TV panels Exempted 7.5

Source: Industry

In January 2018, consumer durables and home appliance makers have sought upward revision (to 20% from current 10%)

in custom duty of major durables such as air-conditioners, washing machines and refrigerators to encourage local

manufacturing. Also, the Consumer Electronics and Appliances Manufacturers Association (CEAMA) has asked the

government to levy custom duty on the printed circuit board (PCB) so as to encourage domestic manufacturing of

smartphones.

Industry Research I Consumer Durables – May 2018

14

Government Policy & Outlook:

- After registering a muted growth in FY18, the consumer durables industry is expecting reduction in GST rates from

the existing 28% to 18% so as to boost demand for the industry.

- The Government of India's policies and regulatory frameworks such as relaxation of license rules and approval of

51% foreign direct investment (FDI) in multi-brand and 100% in single-brand retail are some of the major growth

drivers for the consumer market

- Demand for durables like refrigerators and other consumer electronic goods are likely to witness growing demand

in the coming years in the rural markets with the government planning to invest significantly in rural

electrification. Under the Budget Scheme FY19, the government retained its focus on rural economy by continuing

the pro-poor and pro-farmer schemes

- The government’s focus on rural electrification under the Deendayal Upadhyayaa Gram Jyoti Yojana (DDUGJY)

with total outlay of Rs 756 bn (US$ 12 billion) over FY14-19 and Power For All (a joint initiative by Government of

India (GoI) and state governments) with the objective to make power available to all and facilitate 24X7 power

supply. This scheme has been one of the key drivers for strong growth in the consumer durables industry. With

increasing number of villages being electrified each year and the government’s target to achieve Power for All by

FY19; CARE Ratings expects demand for consumer durables to register a growth rate of about 6.5-8.5% on back

of expected improvement in GDP during the year.

- Also, with growing awareness, easier access to credit, improving standard of living and changing lifestyles,

higher disposable incomes in the hand of rural population on back of higher MSPs for kharif crops as announced in

the Budget FY19 and normal monsoon expected during the year, the consumption is expected to register a growth

going forward.

CORPORATE OFFICE: CARE RATINGS LIMITED (Formerly known as CREDIT ANALYSIS & RESEARCH LIMITED) Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022. Tel: +91-22-6754 3456 I Fax: +91-22-6754 3457 E-mail: care@careratings.com I Website: www.careratings.com

Follow us on /company/CARE Ratings

/company/CARE Ratings