The consumer durables industry which includes both white goods (such as air conditioners, refrigerators, and washing machines) and brown goods (such as food mixers, food processors, JMG and cooking ranges) as also televisions and audio systems is expected to grow by 13-14 percent in value terms to reach the Rupees 200 billion mark in 2008-09. An increase in purchasing power and declining prices of durables has led to a spurt in consumer durables sales. The growth of disposable income among urban families is a key driver of sales of appliances and other durables.

In value terms, the industry is likely to see a consistent growth of 10-12 percent over the next two years. Most of the growth is expected from an upsurge in demand for colour TVs and air-conditioners. Another factor for increase in value sales will be the marginal increase in prices of air-conditioners and refrigerators, due to rising raw material/input costs.

Changing lifestyles, rising incomes and increasing demand from the commercial segment led to air-conditioner sales growth of 21 percent in the current year. These very same reasons, I expect, will boost growth in 2008-09 too. The high penetration of refrigerators among households in metropolitan cities and low preference for the appliance in semi-urban and rural India saw refrigerators grow by just 6 percent in the current year. A long replacement cycle further inhibits growth of this segment. Further, a long replacement cycle inhibits the growth of this segment. The trend is expected to continue in 2008-09 with growth estimated at around four-six percent.

Sales of TVs are growing by an estimated 13-15 percent. This has been fuelled by declining prices of TV sets and rising income levels. Of course, Cricket World Cup in 2007 also contributed significantly to the rise in television sales. However, World Cup notwithstanding, this trend is expected to continue in 2008-09 with sales growing at 10-12 percent.

Sales of washing machines continue to be sluggish due to erratic power supply and constraints of water supply in many cities in India. The current year growth is around six percent. I expect, the coming year will see the sales grow by seven to nine percent.

As for the mass consumption items such as food mixers, food processors, JMG, cooking ranges and so on, this segment is still largely dominated by the non-organized sector and the demand here is growing rapidly at over 15 percent. Last year’s budget saw the peak customs duty drop from 12.5 percent to 10 percent.

It is to be noted that inspite of the peak import duty having been reduced, there was hardly any impact on the domestic consumer durables industry, which does not face significant competition from the imports due to their unique product specifications for the Indian market. The Indian food mixer is a classic example in this regard, designed and built for Indian grinding requirements unique to their foreign counterparts.

The budgetary allocation for rural development is set to be further increased this year. This can only have a positive impact on the sales of consumer durables in the long run.

The Confederation of Indian Industry (CII) has recommended a reduction of CENVAT (Central Value Added Tax) from 16 percent to 14 percent. Further, the CST rates will also reduce from three percent to two percent with effect from April 1, 2008. All of these are benefits for the end-consumer, which will in turn boost growth for consumer durables.