Consumer Durable Sector
Consumer durables are products that are used for domestic use and have an extended lifespan. Goods and appliances such as Televisions, washing machines, Air conditioners, Kitchen appliances, and Cell phones fall into this category. In FY18-FY23 the consumer durable business in India has been witnessing strong growth of 10.1% and forecasted growth for FY23-FY24 is 13.7%.{18}
The Consumer durables industry in India is segmented as;
• Brown Goods – Consumer Electronics (TV, DVD players, Stereos)
• White Goods – Consumer Household Appliances (refrigerators, washing machine, Dishwasher, dryers, etc.) {19}
The white goods market is estimated to cross $21 Bn in 2025 expanding at a CAGR of 11%. Domestic manufacturing contributes nearly $4.6 Bn on average to this industry.{20}
Market size
• Indian Appliance and Consumer Electronics Industry market size is approximately Rs. 1.48 lakh crore (US$ 17.93 billion) by 2025. By 2025, India’s Consumer Electronics and Appliances Industry is predicted to be the 5th largest in the world.
• India’s consumer electronics and home appliances market is set to grow by US$ 2.3 billion between 2022 and 2027, registering a CAGR of 1.31%. {21}
Contribution of the consumer durable sector in the Indian GDP:
• India’s consumer durables sector, currently contributing 0.6% to the nation’s GDP, which is projected to grow at a compound annual growth rate (CAGR) of 11%, reaching US$ 35.73 billion (Rs. 3 lakh crore) by 2029.
• The sector’s GDP contribution is expected to increase by 1.5 times, aiming to become the fourth-largest market for consumer durables by 2027 and the global leader in this industry by 2030 while also creating 500,000 new jobs.{22}
Indian small domestic appliances market:
• The SDA market includes products like Induction Cooktop, Mixer Grinder, Water Dispensers which have experienced significant growth in recent years, with many products in this segment poised for strong momentum in the coming years.
• Projections indicate that domestic sales of mixer grinders will grow at a CAGR of 6.9%. In comparison, the market for induction cooktops is expected to expand at a rate of 5.9% over the next five years, and water dispenser is expected to expand at a rate of 8.6% in the next five years.{23}
Indian room air conditioner market:
• The Indian RAC sector includes products like Indoor Unit (IDU) Outdoor Unit (ODU) Window Air Conditioners (WAC), the Indian RAC market has grown at a robust CAGR of 11.2%, and this growth is projected to accelerate to 15.1% CAGR in the coming years.
• Projections indicate that this growth trend will persist, with the industry expected to expand at a rate of 12.1% between FY 2022-23 and FY 2027-28 and projected to reach Rs. 50,000 crore (US$ 5.6 billion) by FY29.{24}
Headwinds of the Indian RAC Market
1. Air conditioners: From luxury to necessity
With rising purchasing power and unpredictable climatic conditions, air conditioners have become essential in most middle-class households across India.
2. Growth in residential construction
Residential construction is expected to grow at a 6.5% CAGR until 2030 {25} , driven by strong demand for housing and supportive government policies. This growth will create significant demand for room air conditioners (RAC) in the short-to-medium term.
3. Climate change and rising temperatures
As climate change leads to more intense heat waves and higher temperatures, the demand for cooling products, especially air conditioners and air coolers, has surged across India.
4. Availability of financing options
The high upfront cost of air conditioners has been mitigated by financing options, making them more affordable and easing the financial burden on consumers by spreading the payments over time.
Tailwinds of the Indian RAC market
1. Seasonal demand
Air conditioners are primarily seasonal products, with demand peaking during the summer months. This seasonality can lead to fluctuations in sales and inventory management challenges.
2. Power consumption and energy costs
Air conditioners are energy-intensive, and the rising cost of electricity, particularly in certain regions, could discourage consumers from investing in RACs, especially in the context of high energy consumption during peak summer months
3. Competition from air coolers and other alternatives
The availability of alternative cooling solutions like air coolers, which are more affordable and consume less power, could limit the market growth for air conditioners, especially in price-sensitive segments.
4. Environmental concerns and regulatory pressure
The growing focus on environmental sustainability and energy efficiency may lead to stricter regulations on air conditioners, requiring manufacturers to invest in greener, more energy-efficient technologies, potentially raising costs.