Navigating Growth in the Consumer Durables Industry in India
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India is currently the world’s fastest-growing major economy and the largest by population, comprising over 18% of the global populace and accounting for 3% of total consumption. This massive market is poised to become the third-largest consumer market by 2027, driven by rising consumer spending power, changing lifestyles, and evolving tastes for consumer durables and electronics. This rapid growth in the consumer durables industry in India presents unparalleled opportunities for manufacturers, retailers, and other stakeholders to capitalize on the burgeoning demands from Indian consumers.
The consumer durables and electronics industry in India is segmented into small and large appliances, as well as consumer electronics. The market for consumer durables in 2024 is valued at $34.7 billion and is projected to reach $45.6 billion by 2028, growing at a CAGR of 7.1%. Meanwhile, the consumer electronics market, valued at $79.7 billion in 2024, is expected to grow to $108.8 billion by 2028, with a CAGR of 8.1%.
This upward trend in penetration and premiumization is driven by rising aspirations, increasing disposable incomes, and more promotional offers. Key categories such as Televisions, Air Conditioners, and Refrigerators show significant growth potential, with air conditioners being notably underpenetrated in India at only 8%, compared to the global average of 42%.
Government Initiatives and Support:
During the last quarter of FY24, the Indian government distributed approximately Rs. 79 crore (US$ 9.51 million) in fiscal incentives under the Production Linked Incentive (PLI) scheme for white goods. This PLI scheme for White Goods (air conditioners and LED lights), running from FY 2021-22 to FY 2028-29, has approved 64 applicantThe Indian government has distributed Rs. 79 crore (US$ 9.51 million) in incentives under the PLI scheme for white goods in Q4 FY24. The scheme, running from FY 2021-22 to FY 2028-29, has approved 64 applicants with a total committed investment of US$ 814 million (Rs. 6,766 crore). Efforts are underway to create a common data repository on service centers and repair policies for consumer durables to safeguard customer rights.
Since November 2021, 42 companies have been selected under the PLI scheme for white goods, with an investment commitment of Rs. 4,614 crore (US$ 580.6 million), expected to generate 44,000 jobs. An additional 19 companies applied in April 2022, committing Rs. 1,548 crore (US$ 194.79 million). The PLI scheme has facilitated the establishment of 61 component manufacturing units across 14 states, boosting employment.
The government continues to push for self-reliance through the “Make in India” initiative and has extended the PLI scheme for large-scale electronics manufacturing until FY26. The National Policy on Electronics 2019 targets the production of one billion mobile handsets worth US$ 190 billion by 2025, with 600 million units (US$ 100 billion) slated for export.
The government has permitted 100% FDI under the automatic route in electronics manufacturing and has increased the FDI limit in single-brand retail to 100%, with plans to raise it to 51% in multi-brand retail.
Job Market Dynamics
India boasts a workforce of 590 million, with formal employment accounting for 13.6% and informal employment making up 86.4%. Within this landscape, the organized sector employs 18.9%, while the unorganized sector engages 81.1% of the workforce. The formal temporary workforce, numbering 5.4 million, has grown at a CAGR of 10.4% over the past five years, becoming a crucial component of the labor market.
The rise in temporary staffing is driven by the need for operational flexibility and compliance assurance. Businesses increasingly rely on temporary workers to meet fluctuating demands, tapping into a diverse pool of skilled and unskilled individuals promptly.
The Role of the People Supply Chain in the Consumer Durables Industry:
As per the TeamLease Report on Consumer Durables & Electronics – A Staffing Perspective,
- Gender Distribution: The workforce is predominantly male (94%), highlighting a need for greater gender diversity.
- Average Age: The average age is 31, indicating a young workforce.
- Average Tenure: The average tenure is 2.8 years, with metro cities showing higher tenure (3.4 years) compared to Tier 2 cities (2.3 years).
- Education: Nearly half of the workforce has education below the 12th standard, necessitating targeted training programs to develop essential skill sets.
Attrition and its Costs
Attrition remains a significant challenge, especially in metro areas, with an overall rate of 57%. Regrettable attrition, involving high-performing employees, accounts for 22%, while non-regrettable attrition is 31%. The cost of attrition for an organization with 1,000 employees is approximately ₹3.64 crores annually, with significant costs associated with recruitment, training, and lost productivity.
The opportunity cost due to attrition is substantial, with an estimated ₹118.6 crores in lost revenue for an organization of this size, primarily due to the time required to fill vacant positions and the lower productivity of new hires.
Road Ahead
Consumer durable companies see rural India as the next major growth frontier, driven by increased market penetration and the government’s rural electrification initiatives. Over the past few years, improved power supply in tier 3 and 4 towns and villages has paved the way for the adoption of electrical products. Alongside this, these companies are increasingly focusing on training and employing a local workforce as brand ambassadors to enhance product reach and service quality in these emerging markets. By empowering local communities with skills and employment opportunities, companies are not only expanding their market but also strengthening brand loyalty and customer trust in rural areas.
Click here to download your copy of the TeamLease Report on Consumer Durables & Electronics – A Staffing Perspective.
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