'Economic slowdown threat for consumer durable industry in 2020'
New Delhi: The consumer durables industry returned to a steady growth path in 2019 after almost two flat years but might not be able to repeat the feat in the coming year as broader market indicates economic slowdown.
The consumer durables sector, estimated to be around Rs 76,400 crore in FY'19, logged a growth rate of about 10 per cent, largely helped by long and harsh summer, which lifted sales of compressor-based cooling products such as AC and refrigerators.
The industry, however, continued to face challenges in segments like TV panels and microwave, which failed to deliver a notable performance during 2019.
The Consumer Electronics and Appliances Manufacturers Association (CEAMA), however, is hopeful that the demand of cooling products next year will be high as well.
"Given current sentiments, 2020 may not register high growth but weather is expected to play a key level for growth. A hot elongated summer may drive growth for cooling products in the first half," CEAMA President Kamal Nandi said.
The consumer durables industry, which received several incentives in 2019 from the government in form of reduction in customs duty on import of TV panels (open cells), among others, expects the ratio of localisation and backward integration to increase and contribute more towards Make-in-India.
"In the past 5 years, overall approximately Rs 7,500 crore investment has been made by manufacturers - mainly for capacity expansion and new capacity development. This trend will continue in future as well," said Nandi, who is also Godrej Appliances Business Head and Executive Vice President.
Echoing similar views, Panasonic India and South Asia President and CEO Manish Sharma said local production of the components used in assembling a final product is going to increase, helped by the new duty structures, which now make more sense to produce here.
"The need of the hour is backward integration and starting component production in India. Those steps are happening now," he said adding that "we are working very closely with our suppliers and encouraging them to start local manufacturing in India. Definitely next year localisation of components would definitely improve".
Presently, the appliances and consumer electronics have on an average 50 to 55 per localisation. The import ratio depends on the kind of products such as it is higher in case of products such as TV panels and high-end ACs, where open cells and compressors are imported respectively.
According to LG Electronics India Vice President (Home Appliances) Vijay Babu, the South Koren major is also expanding localisation of its products manufactured here.
The company has already achieved almost complete localisation in products like ACs, microwave, front-load washing machines, barring some others.
"Now LG is going to increase locaslisation efforts in india," said Babu adding that "the company is focusing for 100 per centlocalisation".