Consumer durables see single-digit growth as penetration remains low

CEAMA has been pushing to have the government lower the GST charge on products to help give the sector a boost

The consumer durables industry can witness huge growth in the coming years on the back of low penetration levels and rising aspirations of people.

While the industry witnessed a “strong” festival season, a huge potential for growth remains, Sunil Vachani, chairman at Dixon Technologies and the incoming president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), told Business Standard on Thursday.

Vachani was speaking on the sidelines of CEAMA’s 44th annual function.

"We have seen single-digit growth across the sector this year, but it should be much higher. When we compare it to our neighbouring countries, the size of markets for ACs, TVs, and washing machines there is at least 8 to 10 times the size of our market. So we need to look at expanding the Indian market," he said.

According to GfK, a market research firm tracking the consumer durables sector, the industry grew 6 per cent from January to September this year.

Vachani points out that the growth in demand for premium products – large-screen TVs and fully automatic washing machines – also contributes to the slow growth of the sector.

"The higher-end products are moving much faster than those on the lower end of the spectrum, while demand for lower-end products is muted in comparison. But now, we are beginning to see some positivity even in the lower-end products. These are signs of rural demand, which has been stagnant for some time now, bouncing back," he said.

The industry body has been pushing to have the government lower the GST charge on products to help give the sector a boost.

“We need to lower the tax burden on the industry. Some of our products attract the highest GST charge – 28 per cent. But they need to be made more affordable to boost their demand,” he added.

But even as penetration remains low, the Indian market provides a robust opportunity for growth.

"India's households show lower penetration of categories compared to the global average, but with an annual compounded annual growth rate of over 10 per cent in the offline retail channel for the past decade, coupled with increasing adoption and purchasing power, the future holds immense growth opportunities for the entire business ecosystem," said Anant Jain, head of customer success management - India at GfK.

Taking into account the improving macroeconomic conditions, value growth in the industry could grow to 7 to 8 per cent annually, he added.