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India's consumer durables market holds immense growth potential due to lower penetration of electric appliances compared to the global average, according to a report by the Confederation of Indian Industry (CII) and EY India.
The report highlights significant opportunities for domestic consumption, fueled by rising affluence, changing lifestyles, and evolving consumer preferences. It said "Lower penetration levels for appliances compared to the global average and per capita spend in India highlight significant growth potential in domestic consumption". The data from the report revealed that the penetration of key electric appliances in India remains far below global standards. For instance, air conditioners are present in just 10 per cent of Indian households as of FY24, compared to 68 per cent in China, 38 per cent in Thailand, and 80 per cent in Malaysia. Similarly, refrigerator penetration in India stands at 35 per cent, while in China, it is as high as 96 per cent. Household consumption in India has doubled in the past decade, reflecting a growing appetite for consumer goods. The Monthly Per Capita Consumption Expenditure (MCPE) in rural areas rose from Rs 1,430 in 2011-12 to Rs 3,773 in 2022-23. In urban areas, it grew from Rs 2,630 to Rs 6,459 over the same period. This increase in spending, along with shorter replacement cycles, is driving demand for premium and value-added products in the market. The report also noted challenges of the consumer durables industry such as high Goods and Services Tax (GST) rates on some items. It stated that the items like air conditioners are taxed at 28 per cent, classifying them as luxury goods and this poses a challenge for the growth of the industry. However, with rising heatwaves and climate change, air conditioners are increasingly becoming a necessity. Harmonizing GST rates for air conditioners with those of mobile phones could improve affordability and ownership across income groups. The report also mentioned that India's consumer durables sector, which currently contributes about 0.6 per cent of the country's GDP, is projected to grow at a compound annual growth rate (CAGR) of 11 per cent, reaching Rs 3 lakh crore by FY29. As India's market matures, industry players are expected to capitalize on these trends, driving further innovation and inclusivity in the consumer durables space. (ANI)
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