Rural India speaks volumes for durables

26 Dec 2008
High-value goods such as televisions, refrigerators, washing machines and microwave ovens have seen double-digit volume growth during the
year to October. The performance mirrors the robust growth trends seen in basic consumer goods such as soaps and shampoos and was lifted by buoyant demand in rural and semi-urban markets. Data released by market researcher ORG-GFK on Thursday showed that television sales rose 29.3% to 10.3 million sets, while growth in refrigerator sales was 12%. Washing machines sales grew 15% while microwave ovens and air conditioners grew 26% and 17%, respectively. Industry officials say the growth is on the back of entry-level products and largely driven by rural and semi-urban markets. “Acceptance of branded products in the rural market, which is largely driven by first-time purchases and replacement, has resulted in higher sales of entry-level products,” said Samsung India Electronics deputy managing director Ravinder Zutshi. Higher purchasing power among affluent consumers was driving growth in mid- and high-end items in urban markets, where the focus is more towards upgrading products, Mr Zutshi said. The data are in sharp contrast to a steady stream of gloomy official economic figures, and will provide a welcome cheer to policymakers looking for evidence of continuing demand growth in the economy. India’s economic growth is expected to slow to around 7% this fiscal, down from the 9%-plus growth seen in the previous three years. “Growth in demand shows that the consumer durables industry has not been hit by the economic meltdown so far,” said Godrej Appliances’ vice-president (marketing) Kamal Nandi. But he added that consumers in urban areas were postponing purchases and not upgrading products, which could hit demand in the replacement market in future. But some industry officials accept the data with a pinch of salt. The ORG-GFK data showed that among televisions, sales of more expensive LCD and plasma categories, which account for about 5% of total TV sets sold in the country, showed high growth. LCD TV sales surged 153.5% to 4.6 lakh units while there was 90.1% increase in plasma TV sales to 26,700 units. Amitabh Tiwari, head of consumer appliances at LG India, however, said the data on TV sales were on the higher side. “As