Nidhi Markanday , Director , Intex Technologies
Year 2017 was quite eventful for the consumer electronics industry as it witnessed a gradual shift in consumer preference from small size LED TV (32-inch and below) to big screens (40-inch and above. Resolutions and high-end features are also catching consumers’ attention leading to uptick in smart TVs, UHD/4K LED TVs. Big screens and feature-rich TVs will be the future. Simultaneously, all major Indian players have started to switch their product portfolio to big screen LED TVs.
Steps like demonetization, implementation of GST by the government highly impacted the industry, resulting in a decline in sales by 10–15 percent as consumer sentiments was low despite industry doling out plethora of sale schemes. The Union Budget 2018 being the last full-fledged budget by the Modi government, did not go the populist way, posturing some aggressive reforms, with focus to spur the demand side of the economy by proposing various rural income enhancement schemes and reducing various pain areas of farmers. This will further enhance the Make in India initiative of the government in critical electronics industry particularly LED TV, mobiles which are key products of all the government’s initiatives.
The government’s move to walk the talk on Make in India by increasing customs duties is surely welcomed. The budget increased duty on certain LED TV components such as LED panels (15 percent), existing the 7.5 percent and on parts of LCD/LED/OLED TVs to 15 percent from the existing 10 percent which will push for developing capacities for local manufacturing of components. Such move encourages domestic players such as Intex that has been working on enhancing domestic capacities and has recently began its own open cell manufacturing or LED panel manufacturing to improve quality control and produce affordable quality products. It will encourage localization in India with domestic manufacturers now implementing plans for local production capacity. Intex has been known to cater to the developing Tier-II and Tier-III cities since inception with its affordable consumer products and with the various rural personal disposable income enhancement schemes introduced in the budget, it will give a fillip to the sale and demand of electronic products.
Consumer durables have become an intrinsic part of the daily lives and so have to be treated like FMCG and not as luxury or sin goods. Keeping the changed reality in mind, the industry had proposed and strongly expected the government would shift the consumer durables and LED TVs in particular from the current 28 percent slab to 18 percent, prior to which the industry saw a dramatic decline in sales and consumer sentiments post-GST implementation in July 2017. If India wishes to maintain its fastest growing economy tag, then consumerism must increase, which cannot be achieved by placing a 28 percent tax bracket on consumer electronics like smart TVs. In contrast, some of the biggest markets in the world have a tax structure below 12 percent on TVs and their market size is growing substantially. In India, the average screen size which was predicted to be at 38-inch in year 2017-18, remains at 33-inch, in comparison.
As part of expansion of the consumer durables portfolio, since 2016, Intex has enhanced its LED TV range with smart LED TVs including 4K TVs, added refrigerators, air coolers, washing machines with fully-automatic models and introduced new products like air purifiers and currency counting machines. According to Future Market Insights (FMI), the global FPD market is expected to reach USD 135 billion by 2020, growing at a CAGR of nearly 6 percent. This trend is being driven by increasing rates of technology adoption, increased demand for larger size displays, new consumer electronics markets, and advances in research and development by FPD manufacturers. The biggest market for FPDs is consumer electronics.
Post-Budget, CEAMA said the impact of the price increase would be momentary and have temporary impact. To conclude, an increase in disposable incomes, expansion of organized retail, growing demand in rural markets, increasing urbanization and a reduction in the replacement cycle from 9-10 to 4-5 years are good news for consumer durables off take. While a burgeoning population of working women will drive the demand for home appliances, the organized retail industry is expected to corner 15–18 percent of the consumer durables market by 2020.