Digital India: Consumer Electronics Market on the Brink of $100 Billion

India’s domestic market for consumer electronics and home appliances is poised to reach nearly $100 billion by the end of December 2024, making it the third-largest market globally, trailing only China and the United States. This significant milestone highlights the growing demand for devices such as smartphones, laptops, air conditioners, and refrigerators within the country. Notably, this figure only includes consumer electronics and home appliances sold within India and excludes heavy appliances and ancillary electronics, which would substantially increase the market’s size.

The projected $99 billion market size in 2024, with the potential to cross the $100 billion mark, reflects a robust year, especially with the strong festive season demand expected between September and December. The festive season is crucial in India, often contributing to nearly half of the annual sales for electronics and appliances.

What stands out is India’s rapid growth pace in this sector. Analysts estimate a 10% growth rate for the Indian market in 2024, which is almost double China’s growth rate and triple that of the US. This surge is fuelled by the increasing affordability of consumer electronics, driven by easy access to credit, financing schemes, and year-round discount offers. This trend is particularly evident in the rise of high-value products like smart TVs, where consumers are willing to pay more for premium features.

Tarun Pathak, Director of Research at Counterpoint India, emphasized the importance of these financing options in changing market dynamics. While there may be a slowdown in sales volumes, the rising average prices, particularly in segments beyond smartphones, have found a market among Indian consumers. This has led to sustained revenue growth for companies operating in India, despite fluctuations in sales volumes.

For instance, Samsung India reported a 16% increase in net revenue to ₹98,924 crore in FY23. Similarly, China’s BBK Group, which operates five gadget brands in India, maintained steady revenue at ₹81,870 crore in FY23, even though sales volumes fell significantly. Apple India also saw robust growth, clocking ₹49,321 crore in revenue in FY23, driven primarily by the increasing popularity of iPhones in the country.

Looking ahead to FY24, these companies are expected to continue their growth trajectory, with high single-digit revenue increases. Apple India, in particular, is likely to see exponential growth due to the rising demand for iPhones.

However, not everyone agrees with the optimistic view of India’s electronics market reaching the $100 billion mark. Navkendar Singh, Associate Vice-President at IDC India, cautioned that the growth in market value does not necessarily equate to market expansion. He argued that the increase in value might benefit retailers, but it does not indicate a broader market growth or greater value generation for the Indian economy. Singh pointed out that while more premium devices are being sold, this trend is largely driven by credit availability and consumer sentiment, rather than an influx of new customers into the market. This, he warned, could lead to a skewed understanding of the market’s true growth potential.

Despite these concerns, retailers are enthusiastic about the current trends. Kailash Lakhyani, Founder and Chairman of the All-India Mobile Retailers Association, noted that after a period of low demand, retailers are now benefiting from higher-value sales. He highlighted the growing demand for premium electronics and appliances, driven by consumers’ desire for a physical experience before purchasing high-end products. With ample availability of premium units and an expected increase in footfall during the festive season, retailers are optimistic about the future.

In summary, India’s consumer electronics and home appliances market is on the cusp of a major milestone, driven by strong consumer demand, particularly for premium products. While there are differing views on the implications of this growth, the overall trend suggests a positive outlook for the industry as it continues to expand and evolve.

The image added is for representation purposes only