Aug 07, 2020
India’s appliances and consumer electronics market is projected to double to reach $21.8B by 2025. The production of consumer electronics contributes to over 17% of total electronics produced in India. The major growth drivers of this segment are the rise in spending of the middle-income group among non-traditional consumers. There’s an emergence of a new kind of home essentials categories like microwaves, dishwashers, trimmers, TVs, and air conditioners that have now turned essential for a sustainable and comfortable lifestyle post-COVID. 
Increasing India’s Rural Demand
The consumption pattern of home appliances is witnessing an uptrend in rural areas due to increasing technology awareness and product affordability. Surprisingly, the annual consumption growth rate in the Indian rural market exceeds urban consumption by over 1% point at 9.7%. Rural Indian households are spending more on basic, healthcare, and education needs than a few years ago. 
This has led the brands to shift their focus towards rural markets as it holds the largest demand base of more than 720M consumers. Refrigerators, kitchen appliances, and other consumer electronic goods are likely to see demands in the years to come. The government’s rural electrification and power infrastructure up-gradation are taking a new shape. 
Increasing Need for Localization
Around 95% of consumer electronics and appliances sold in India are assembled locally. However, dependence on China for components and completely knockdown kits still ranges up to 70% of the total value addition. To overcome this domestic disability, the Indian government is pushing for a self-reliant Indian market, especially for consumer electronics such as televisions, air conditioners, mobile phones, and many more.
Recent amendments of import policy, such as licensing import of fully-built televisions, move towards achieving self-reliance. This forces the importer of the commodity to seek an import license from the government and imposes a soft barrier to easy entry. There could be more such announcements coming in the consumer electronics segment, creating a need for a localized supply chain in consumer electronics.
India’s Favorable EMS Ecosystem
Industries across the world are revisiting their global supply chain and reworking alternative business continuity plan. There’s a clear proposition across the board of companies to move to China plus one strategy to reduce their dependence on a single source. It’s a favorable time for India’s capabilities to support the design-led manufacturing of such consumer electronic products.
The government is making multiple moves to improve the ecosystem for manufacturing. Initiatives like permitting 100% FDI and providing CAPEX and disability subsidy in consumer electronics manufacturing encourage more foreign companies to set up manufacturing facilities in India. The government’s focus on ease of doing business and liberal incentive packages announced for investments in electronics is an added advantage.
Backed by 40 Years of Expertise
We contribute our 40 years of design and manufacturing expertise spanning multiple diverse markets. We look forward to discussing how we can deliver world-class products for OEMs across the globe. We understand our home Indian market, familiar with its vast regulatory and selling environments. We foster growth opportunities within India through our strong technology incubation ecosystem. We also assist global OEMs in entering the Indian market by leveraging the local supply chain and favorable operating environments for cost reductions.
Our flagship Chennai location opened in 2006 and lies within a Special Economic Zone (SEZ) for electronics manufacturing, offering economic incentives for imports and exports. This primary facility is within 90 minutes of the Chennai seaport and 20 minutes to the international airport. Additional road and rail connectivity links to the rest of India and beyond and infrastructure advantages with faster import and export clearances. We also have labor force flexibility, both technical and manual, to scale to demand rapidly.
To learn more about this topic, please contact us.