MAGNUM Blog

Indian consumer durables market is broadly segregated into urban and rural markets and is attracting marketers from across the world. The sector comprises of a huge middle class, relatively large affluent class and a small economically disadvantaged class. Appliances and consumer electronics industry is expected to double to reach US$ 21.18 billion by 2025.Electronics hardware production in the country increased from Rs. 4.58 trillion in FY19 to Rs. 5.46 trillion in FY20. TV penetration in India stood at 69%, driven by the DTH market. The total count of DTH subscribers in the country stood at 70.58 million in the country in 2020. Electronics, domestic appliances and air conditioner market in India was approximately around Rs. 5,976 cr, Rs. 17,873 cr and Rs. 12,568 cr respectively. Smartphone shipments in India increased, making the fastest growing among the top 20 smartphone markets in the world.

According to India Cellular & Electronics Association (ICEA), India has the potential to achieve a value of US$ 100 billion in manufacturing of laptops and tablets by 2025. According to DPIIT, between April 2020 and October 2020, exports of electronic goods from India stood at US$ 5.05 billion.

In November 2020, three private equity funds—Investcorp, Norwest Venture Partners and Gaja Capital together invested ~Rs. 800 crore to acquire ~ 31% stake in Xpressbees, the e-commerce focussed end-to-end supply chain solutions provider. In November 2020, Pegatron Corp., an iPhone assembler in Taiwan, announced its plans to invest US$150 million in building a plant in India. In October 2020, the Karnataka government approved a Rs. 3,540 crore  investment by Aequs SEZ Private Limited to develop a consumer electronics and durables goods (CEDG) cluster in Hubballi—about 430 kms from Bengaluru. In October 2020, Amazon India launched new specialised fulfilment centre with a storage capacity of 1.2 million cubic feet in Bengaluru, which is specialised to store and manage customer orders from the large consumer appliances and furniture categories in their portfolio.

The Government of India has allowed 100% Foreign Direct Investment (FDI) under the automatic route in Electronics Systems Design and Manufacturing sector. FDI into single brand retail has been increased from 51% to 100%; the government is planning to hike FDI limit in multi-brand retail to 51%.On November 11, 2020, Union Cabinet approved the Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.

Road Ahead

Indian appliance and consumer electronics (ACE) market is expected to increase at 8-9% CAGR to reach Rs. 3.15 trillion in 2022. Demand growth is likely to accelerate with Work from Home concept and easy access to credit. Increasing electrification of rural areas and wide usability of online sales would also aid growth in demand.

BENEFICIARIES :    JOHNSON CONTROLS-HITACHI AIR CONDITIONING INDIA LTD, BLUE STAR LTD, VOLTAS, BAJAJ ELECTRICALS, AMBER ENTPRISE, GANDHIMATI APPLIANCE, DIXON, TTK PRESTIGE, POLYCAB, HAVELLS, IFB IND.

The textiles and apparel industry in India has strengths across the entire value chain from fiber, yarn, fabric to apparel. It is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool and silk products to the organized textile industry. The organized textile industry is characterized by the use of capital-intensive technology for mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

The domestic textiles and apparel industry contribute 2.3% to India’s GDP, 7% of the country’s manufacturing production and 13% of the country’s export earnings.

The textiles and apparel industry in India is the second-largest employer in the country providing employment to 45 million people. It is expected that this number will increase to 55 million by 2020.India has also become the second-largest manufacturer of PPE in the world. More than 600 companies in India are certified to produce PPEs today, whose global market worth is expected to be over $92.5 bn by 2025, up from $52.7 bn in 2019.FDI in the textiles and apparel industry has reached up to $3.4 bn during 2020Exports in the textiles and apparel industry are expected to reach $300 bn by 2024-25 resulting in a tripling of Indian market share from 5% to 15%Further, the domestic consumption of $100 bn was divided into apparel at $74 bn, technical textiles at $19 bn and home furnishings at $7 bn. While exports comprised of textile exports at $20.5 bn apparel exports at $16.1 bn and handlooms at $3.8 bn.

Cabinet approves MoU between India and Japan for cooperation in the field of good quality textiles.

GROWTH DRIVERS: ֎ Abundance of raw material ֎ Presence of entire value chains ֎ Competitive manufacturing costs ֎ Availability of skilled manpower ֎ Large and growing domestic market ֎ preferences for brands ֎ Organized retail landscape & e-Commerce ֎ Increased focus on technical textiles due to growth of end-user industries such as automotive, healthcare, infrastructure and oil and petroleum.

Road Ahead

Make in India advantage for companies. The growth in near term would be flat but once the Economy starts normalizing the growth could be expected between 6-7% going forward. Huge opportunity for Exports and domestic consumption, Sustainable outlook for this sector.

BENEFICIARIES : KEI Industries Limited Polycab India Limited Finolex Cables Limited V-Guard Industries Pvt. Ltd. KEC International Limited Havells India Ltd. Sterlite Technologies Ltd.