India's Booming Consumer Durables Market: Opportunities & Challenges

India's consumer durables sector is set for significant growth, driven by rising affluence and changing lifestyles. Despite low penetration rates for appliances and challenges like high GST, the market holds immense potential, projected to grow rapidly by FY29.

India's consumer durables market is primed for substantial growth, according to a report by the Confederation of Indian Industry (CII) and EY India. The potential stems from relatively low penetration of electric appliances compared to global standards, underscoring opportunities for enhanced domestic consumption.

The report reveals that key appliances' penetration in India is notably lower than international benchmarks. For example, only 10% of Indian households owned air conditioners by FY24, a stark contrast to countries like China at 68% and Malaysia at 80%. Similarly, refrigerator ownership stands at just 35% in India compared to China's 96%.

Consumption patterns in India have evolved significantly, with a doubling of household consumption over the past decade. In rural areas, the Monthly Per Capita Consumption Expenditure surged from Rs 1,430 in 2011-12 to Rs 3,773 in 2022-23, and in urban areas from Rs 2,630 to Rs 6,459. The rise in spending is driving demand for premium products.

The industry faces challenges, including high GST rates, with air conditioners taxed as luxury items at 28%. However, with climate change increasing the need for air conditioning, aligning GST rates with necessities like mobile phones could enhance accessibility. The consumer durables sector, contributing 0.6% to India's GDP, is expected to grow at a CAGR of 11%, reaching Rs 3 lakh crore by FY29, indicating a promising future should these hurdles be addressed.

(With inputs from agencies.)