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December 19, 2009

Consumer Electronics


The electronics industry is center stage in today’s transforming and globalized market. As such, improving and even accelerating hightechnology innovation, while ensuring its propriety, will be instrumental if the world is to maintain its competitive advantage for continued economic prosperity and indispensable national security. India is the fifth largest economy in the world and has the second largest gross domestic product among the emerging economies. Owing to its large population, the potential consumer demand is ever increasing and consequently under appropriate conditions, strong growth performance can be expected. The liberalization of the Indian economy that began in 1991 has started changing regulatory, financial, and monetary policies leading to a higher pace of growth. The software industry in India is already a world leader. Electronics and Information Technology is the fastest growing segment of Indian industry both in terms of production and exports. Today, the electronics industry is completely delicensed with the exception of aerospace and defence electronics, and along with the liberalization in foreign investment and exportimport policies of the entire economy, this sector is attracting considerable interest not only as a vast market but also as potential production base by international companies.

Consumer Electronics and Appliances Manufacturers Association (CEAMA) is an all India body of organizations in Consumer Electronics and Durables sector, Rs. 30,000 Crore Industry. It is registered as a non-profit organization, looking after the common interests of its members, for sustainable growth in the sector. It has been existence for past 30 years. Presently, there are more than 100 members. The membership spectrum comprises of domestic and MNCs, and includes large, medium and small scale sector.


The electronics industry started its first production during early 1930’s and has grown rapidly in the recent years, with sales increasing by a factor of 15 since the early 1960’s. Electronic sales, which were $120 billion in 1986, have increased over $1 trillion with an average annual rate of 12% in United States. The main impetuses for such phenomenal market growth are the intrinsic pervasiveness of electronic products and the continued technological breakthroughs in integrated circuits. With the upcoming of VLSI technology 105 components per chip has been achieved by which size of electronic devices has drastically decreased. With decrease in size the complexity of device has increased which accounts for its slowed growth in recent years because of difficulties in defining, designing and processing complicated chips.

The Indian Electronics industry dates back to the 1960s, was driven mainly by the state and was initially restricted to the development and maintenance of fundamental communication systems including radio broadcasting, telephonic and telegraphic communications and augmentation of defence capabilities. Main players were public sector giants like Bharat Electronics Ltd and Indian Telephone Industries Ltd. The late 1980s and 90s saw the liberalization and globalization of the Indian economy and the electronics industry too witnessed a boom, mainly in the consumer electronics area, driven by a growing middle class with larger disposable incomes. The 1980s saw growth rates in excess of 30%, which had slowed down to 7% by 200102, due to various factors such as slowdown in the Indian economy, saturation of demand in products such as TVs and increasing competition from cheaper imports due to a fall in customs duties.


During the financial year 2007-08, the consumer electronics industry continued its growth path.

The colour TV is the largest contributor in this segment. During the current financial year, the domestic market of CTV is estimated to cross 15 million units. The high end products, particularly Liquid Crystal Display (LCD) TVs continues to register a growth of more than 100% and is expected to cross 3 million by 2010-11. The phenomenon of falling prices in the LCD TV continued over the year and there is a marked tendency amongst the consumers to go in for bigger size LCD TVs. Manufacturing of LCD TV has started in the country and it is expected that it would increase, as the demand increases. DVD Player market has shown a growth of over 20% and is estimated at over 7 million this year. Production of B&W TV continues to decline.


India’s production of consumer electronics goods during the year 2007-08 registered a growth of 12 percent (21 percent in US$ terms) over the year 2006-07. In value terms production of consumer electronics goods is estimated at Rs. 22500 crore ( US$ 5589 million) up from Rs. 20000 crore ( 4624 million) estimated in the year 2006-07.

Production of consumer electronics items has been growing at an annual average growth rate of 10.27 percent (14.41percent in US$ terms) during the past five years.

India itself being a very big market for consumer electronics goods, only a small portion of the total production is exported. During the year 2007-08 only 7.1 percent of the total consumer electronics production was exported.

Key Players:


Ø Rise in disposable income: The demand for consumer electronics has been rising with the increase in disposable income coupled with more and more consumers falling under the double income families. The growing Indian middle class is an attraction for companies who are out there to woo them.

Ø Availability of newer variants of a product: Consumers are spoilt for choice when it comes to choosing products. Newer variants of a product will help a company in getting the attention of consumers who look for innovation in products.

Ø Product pricing: The consumer durables industry is highly price sensitive, making price the determining factor in increasing volumes, at least for lower range consumers. For middle and upper range consumers, it is the brand name, technology and product features that are important.

Ø Availability of financing schemes: Availability of credit and the structure of the loan determine the affordability of the product. Sale of a particular product is determined by the cost of credit as much as the flexibility of the scheme.

Ø Rise in the share of organized retail: Rise in organized retail will set the growth pace of the Indian consumer durables industry. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER), organized retail which constituted a mere four percent of the retail sector in FY07 is likely to grow at 45-50% per annum and quadruple its share in the total retail pie 16% by 2011-2012. The share will grow with bigger players entering the market.

Ø Innovative advertising and brand promotion: Sales promotion measures such as discounts, free gifts and exchange offers help a company in distinguishing itself from others.

Ø Festive season sales: Demand for color TVs usually pick up during the festive seasons. As a result most companies come out with offers during this period to cash in on the festive mood. This period will continue to be the growth driver for consumer durable companies.

Policy developments and new initiatives by Indian government:

The Government has played a supporting role in enabling the industry to realise the potential of the Indian electronics industry. India has made the transition from being a sort of controlled economy to a free market. Foreign investment up to 100 per cent is possible in the Indian electronics industry to set up units exclusively for exports. It is now possible to import dutyfree all components and raw materials, manufacture products and export it. Some of key initiative taken by the government is as:

§ EHTP (Electronic Hardware Technology Park) is an initiative to provide benefits to companies that are replacing certain imports with local manufacturing. EHTP benefits include export credits, no duties on imported components or capital equipment, business tax incentives, and an expedited importexport process.

§ Customs duty on specified raw materials / inputs used for manufacture of electronic components or optical fibres / cables has been removed.

§ Customs duty on specified capital goods used for manufacture of electronic goods has been abolished.

§ Excise duty on computers has been removed. Microprocessors, hard disc drives, floppy disc drives and CD ROM drives continue to be exempt from excise duty.

§ The Special Incentive Package Scheme (SIPS) to encourage investments for setting up semiconductor fabrication and other micro and nanotechnology manufacturing industries was announced in March 2007. The incentives admissible would be 20 per cent of the capital expenditure during the first 10 years for units located in Special Economic Zones (SEZs) and 25 per cent for units located outside SEZs.

§ Recently, government of India took a decision to stop the inflow of Chinese made electronic gadgets such as toys, cell phones etc. as researchers suggests that these low cost goods are very hazardous for health especially for children.

SWOT Analsysis:

Global impact of recession:

Consumer demand for electronics, from computer to digital cameras is declining fast amidst the global economic slowdown. Sales of mobile phone is shrinking at their fastest pace ever as consumer cut spending, a Reuters poll showed, with analysts increasingly concern about unsold phones pilling up in stores. On average, global market volume was shrinking at the rate of 6.6 per cent last year (AprilDec 08) and 5.7 per cent during last quartertraditionally the strongest period for the industry due to holiday sales.

The global semiconductor revenue is expected to fall 16.3 per cent in 2009 to $ 219.2 billion after a 4.4 per cent fall in 2008, due to the economic slowdown. Though highend luxury items are likely to suffer most, especially in the consumer electronics space, the exceptions will be socalled Smartphones, including Apple’s iPhone and RIM’s Blackberry products.

INDIA, an Exception:

The consumer electronics situation in India appears rather rosy. The customer electronics industry is growing in India and has a lot more potential. The industry has witnessed significant growth in recent years due to several factors, such as retail boom, growing disposable income and finance schemes. Highticket items are selling mainly in metropolitan cities and lowticket items in tier2 and tier3 towns. Innovations are appealing and touching Indian customers through consumer electronics. Bluray and full highdefinition are the new technologies attracting customers.

The consumer electronics industry will most likely grow in India at a rate of 10 per cent overall in value. With new excise duty structure, consumers will have more confidence in consumer electronics items. Products which are selling in India are all those which have low penetration or are nascent in category lifecycle. Most selling are color TVs and refrigerators but growth is mostly seen in LCD TVs and expensive electronic items. Highend refrigerators, microwave ovens and frontloading washing machines are growing exponentially.

Recent 2 per cent cut in excise duty as well as 4 per cent cut in Dec08, modern retail distribution, 7 per cent GDP growth, and trend towards flat and slim category will be the key reasons behind this growth. Large companies even now are offloading the production to original equipment manufacturers. According to industry estimates, India’s electronic equipment consumption in 2005 was 1.8 per cent. This is likely to grow to 5.5 per cent in 2010. Similarly, India’s semiconductor total available market (TAM) revenues are projected to grow by 2.5 times, while the total market is expected to double its revenue in 2009.

Moreover, the companies in India are not so much affected by recession due to the following factors:

· Booming entertainment sector has resulted in providing an impetus to the sector.

· Internet Retailing has great potential. Today, consumers are more than willing to purchase branded items over the internet. There are huge opportunities for the Company to expand and grab the benefits of retailing.

· Digital models scoring over analog controls. Digital techniques have slashed manufacturing times and costs have also reduced.

· The fast saturating urban markets are making the manufacturers turn their attention to more lucrative and largely untapped rural markets. Increase in rural income and prosperity, enhanced standard of living, improved infrastructure have opened up the markets of B & C Class cities.

· There are opportunities to expand the range of components so as to reduce cost of products.

· There are opportunities to increase penetration in the Indian Consumer Electronics and Home Appliances Market; and domestic and global growth by launching innovative products.

· Organized retailing which now constitutes around 4% of total retail sector is likely to grow at a much faster pace thereby providing huge opportunities. There are opportunities to increase the sales of different range of products manufactured by Company by way of association/tieup with retail outlets; Super Market; Hyper Marts etc.

Future Growth:

ü Propelled by growing middle class population, changing lifestyle and rapid urbanization, the Indian consumer electronics industry is forecasted to grow at a rapid rate of 10% to 12% in the coming few years.

ü Volume sales of washing machine will be driven by growth in fully automatic category during 2008-09 to 2011-12.

ü The market for televisions in India is changing rapidly from the conventional CRT technology to Flat Panel Display Televisions (FPTV). Currently, the split between CRT and FPTV is around 97% and 3% respectively, and the share of FPTV is projected to increase at robust rate in near future.

ü Frost-free refrigerator sales, certainly growing at a much faster pace than the direct-cool category, are anticipated to drive the Indian refrigerators market over the forecast period.

ü The AC market in India is projected to grow at 30% to 35% for the coming few years.

ü Driven by young population, demand for MP3 players and digital video appliances are anticipated to surge at double-digit rate in near future.

ü The low penetration level of consumer electronics goods coupled with increasing preference for comfort and luxurious goods are widely attracting the foreign as well as domestic players to the industry.


Product differentiation strategies.

Increase market dominance.

Increased customization to suit domestic demand.

Promotion of R&D activities.

Promoting India as an ideal destination for Electronics Hardware manufacturing.

Increasing share of organised retail.

Creating more hubs for rural distribution and make it more efficient.

Online purchase of consumer electronics


  1. Thanks, to sharing excellent information about consumer electronics. Today, electronics industry is middle stage of changing and globalized market. India is the fifth largest economy in the world and has the second largest gross domestic product among the emerging economies. Today, electronics and Information Technology both are the the fastest growing section of Indian industry. In consumer electronics, day by day update latest product, technologies in the market. So consumer electronics has a high demand in the market. Market Research Report

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