Consumer durable firms dispute IIP data

The consumer durables sector registered a negative growth in January, continuing the poor trend in the first three quarters of the current financial year, according to official data released on Wednesday.

Durables manufacturers, however, say that the sector has seen healthy growth, and they are demanding that the criteria to measure industrial production be changed.

The Index of Industrial Production (IIP) suggested that the output of the consumer durables slipped into the negative, at 3.1 per cent, in January, as against a 5.3 per cent growth in the corresponding period last year.

It was the most noticeable pressure point in the official data which announced a 1.7 per cent dip in production during the April 2007-January 2008 period, as compared with 10.6 per cent in the corresponding previous period.

The industry experts attributed the trend to the improper weightage for certain goods in the indices and the increased import of premium products.

For instance, the IIP still gives much weightage to slow-moving goods like black and white TVs, VCRs and tape recorders, and less to DVD players, set top boxes and LCDs that are seeing good demand.

Suresh Khanna, secretary general, Consumer Electronics Manufacturers Association said, "Consumer durables contribute more than 5.5 per cent to the production index, so the basic criteria for the measurement needs to be changed to reflect this. Like autos, the government must overhaul the sector considering the lower penetration level of the products."

Analysts say that the discrepancy in the figures is also due to skewed classification of consumer durables that also includes automobiles.

George Menezes, COO, Godrej Appliances, observed that the production index could not be linked to consumer demand as most of premium products were imported.

"Premium products like LCDs, front-load washing machines, frost-free refrigerators are doing well in the market. It is important to consider the sales growth to judge the sector's performance," Menezes said.

Industry insiders also pointed out that manufacturing would spurt over a period of time with companies setting up plants for premium products as well.

Recently, Samsung began production of its front-load washing machines in India. Both Samsung and LG Electronics have started new facilities at Chennai and Pune respectively.

Indian players like Mirc Electronics and Godrej have announced expansion plans for air-conditioners and washing machines.