October 9, 2024
The sector’s contribution to GDP, currently 0.6%, could increase by 1.5 times, driven by domestic demand and indigenisation
Technological innovations and shifting consumer preferences towards premium, smart, and sustainable products are reshaping the market
India’s online sales for consumer durables remain at around 14% but are poised to grow with expanded supply chains and government initiatives like ONDC
The report suggests incentivising ownership of energy-efficient products through tax breaks and financing options to drive sustainability
India is on track to become the fourth-largest market for consumer durables by 2030, potentially creating 500,000 new jobs, according to a recent report by EY-Parthenon and CII. The report, titled Vision 2030: India’s Rise as a Global Force in Consumer Electronics and Durables, projects the sector will grow at a compound annual growth rate (CAGR) of 11%, reaching a market size of INR 3 lakh crore by 2029. Currently contributing 0.6% to India’s GDP, the consumer durables sector could increase its economic contribution by 1.5 times in the coming years, primarily driven by rising domestic demand, a focus on sustainability, and increasing indigenisation.
The report highlights a shift in consumer habits, with more people investing in premium and value-added products. This is driven by technological innovations, such as smart appliances, which shorten product replacement cycles. Consumers, especially from the growing middle class, are increasingly seeking products that offer connectivity, convenience, and sustainability. The rising demand for these smart and energy-efficient products presents a substantial opportunity for the sector to boost production and output.
While India lags behind other markets in online sales, with only about 14% of sales happening online, the sector is expected to witness growth in this area. Online sales will likely expand as the supply infrastructure develops, particularly in tier-2 and tier-3 cities and rural regions, bolstered by government initiatives such as the Open Network for Digital Commerce (ONDC).
The report also emphasised the importance of integrating emerging opportunities and overcoming existing challenges to make the sector a cornerstone of India’s economic growth and job creation. It recommended that tax incentives and on-bill financing be used to encourage the ownership of energy-efficient products, contributing to sustainability goals. Moreover, refining the Production-Linked Incentive (PLI) scheme to focus more on components like controllers, compressors, and motors would aid in boosting indigenisation efforts.
Lastly, the report called for the harmonisation of GST slabs to improve affordability and encourage more inclusive ownership across various income groups, further accelerating the growth of the consumer durables sector in India.
Source: Economic Times