Industry
India’s domestic consumer electronics market closes in on $100-bn valuation
Summary
- At close to $100 billion, the country's market size for such goods would become the third-largest, only behind China's $268 billion and America's $155 billion expected by 2024-end.
New Delhi: India's domestic market size of consumer electronics and home appliances such as smartphones, laptops, air-conditioners, and refrigerators is likely to swell to nearly $100 billion by the end of December, analysts said.
At close to $100 billion, the country's market size for such goods would become the third-largest, only behind China's $268 billion and America's $155 billion expected by 2024-end.
To be sure, this takes into account only devices and appliances retailed to consumers within India, and does not include heavy appliances, and ancillary electronics, whose inclusion will considerably bump up the size of the market for such goods.
The value of all consumer electronics (smartphones, PCs, smart TVs, audio products, wearables and tablets) and home appliances (kitchen appliances, air-conditioners, refrigerators and washing machines) sold to consumers in the current calendar year is expected to be $99 billion—with the likelihood of hitting $100 billion subject to a strong festive demand.
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In India, September to December months are grouped as the ‘festive season’, and often account for nearly half of net electronics and appliances sales for the full year.
Along with value, what’s interesting to note is India’s fast growth pace. Analysts that Mint spoke to said that the pace of growth in India’s market is expected to be around 10% this year. This is nearly double that of China, and triple that of the US’s 3.3% growth in market size this year.
Tarun Pathak, director of research at market research firm Counterpoint India, said that the rise in valuation is in line with the overall trend of the market. “The advent of affordability options and easy access to credit changed the market dynamics significantly. The slowdown in volume could be offset by brands, especially beyond smartphones such as in smart TVs, where a rising average price with discretionary features found a market among buyers thanks to easy financing schemes, as well as discount offers and promotions that are now running in India across the year, and not just in the festive season," Pathak said.
This also reflects in company financials. As per the Registrar of Companies (RoC), Samsung India reported a 16% growth in net revenue to ₹98,924 crore in FY23. China’s electronics conglomerate BBK Group, which operates five gadget brands in the country, maintained steady revenue at ₹81,870 crore in FY23 despite sales volumes falling significantly. Apple India clocked ₹49,321 crore in revenue in FY23.
The financials for FY24 are yet to be filed by any company.
Each of these companies is expected to report a high-single digit revenue growth in FY24, while Apple India’s growth could be exponentially higher, driven by rising iPhone sales.
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However, not everyone is convinced about the $100-billion market size of India’s electronics industry. Navkendar Singh, associate vice-president at market researcher IDC India, said that value-addition is not necessarily a sign of growth.
“The growth in value could be to the benefit of retailers, but it’s important to note that value growth is not a sign of market growth—or increasing value generation from the domestic market for the Centre. More premium devices being sold in India is a sign of credit proliferation and buyer sentiment, but the fact remains that there are no net new customers joining the electronics market. This gives the market a lopsided growth indicator—and doesn’t mean that India is actually becoming a market akin to China or the US," he said.
Retailers, though, are excited about the growth trends. Kailash Lakhyani, founder and chairman of industry body All India Mobile Retailers Association and vice-chairman of Confederation of All-India Traders, said that after a year of low demand, retailers are finding their footing in higher-value sales. “Retailers are indeed seeing a clear demand for higher-value, premium electronics and appliances. What helps them is ample availability of high-value units across electronics and appliances, and the consumer nature of wanting to get a physical experience of a premium device, before making a purchase. This is clearly adding value, and footfall is expected to increase starting next month on account of the festive sales," he said.
Read more: Retailers expect festive boost after high inflation, elections hurt sales
