The Indian consumer market is set to scale new heights. With an estimated ten-fold increase in middle-class population and three-fold rise in household income, aggregate consumer spending is likely to more than quadruple from around US$ 428.69 billion in 2005 to US$ 1.76 trillion in 2025.

Simultaneously, India is likely to leap-frog from being the twelfth largest consumer market in the world to become the fifth largest consumer market in the world by 2025, says a study last year by McKinsey Global Institute (A ‘bird of gold’ – Rise of India’s Consumer Market”).

Significantly, over 23 million Indians – more than the population of Australia – will number among the country’s wealthiest citizens.

• Consumer Durables

A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing has been instrumental in changing the pattern and amount of consumer expenditure leading to robust growth of consumer durables industry.

The continuous increase in the consumer demand has led to the industry clocking accelerated growth rates in the recent past. While the industry recorded growth rates of 8.5 per cent in 2005-06 and 11.5 per cent in 2006-07, it is estimated to grow by 12 per cent in 2007-08. Going by the industry figures, sales have rocketed by 22 per cent in value terms in 2007.

According to ORG-GFK data, the combined size of five big-ticket product categories-colour television, refrigerators, washing machines, air conditioners and microwave oven-rose from US$ 4.1 billion in 2006 to US$ 5.1 billion in 2007.

The higher growth in the sales value compared to volume growth rates can be explained by the surge in the sales of high-end consumer durable goods. Products like split air-conditioners (60 per cent), frost-free refrigerators (54 per cent), fully automatic washing machines (35 per cent), microwave ovens (35 per cent), high-end flat panel TV (100 per cent) are all estimated to record impressive growth rates in 2007-08.

• Consumer Electronics

The consumer electronics segment is estimated to grow at the rate of around 11 per cent, achieving a production level of US$ 5.04 billion during 2006-07 compared to 2005-06. The fastest growing segments during the year were colour TVs, DVD players and home theatre systems. The growth momentum has continued in to the new fiscal.

1. As per the Consumer Electronics and Appliances Manufacturers Association estimates, high-end television sets recorded 100 per cent growth, and the CTV segment grew by over 25 per cent in April.
2. Colour TV market sales grew at a robust CAGR of 22 per cent to 15 million units in 2007.
3. Mobile handset sales – including new users and replacements – surged by 26 per cent to 93 million units in 2007.
4. Personal Computers (PC) sales shot up by 11 per cent to 3.28 million in the first half of 2007-08. Significantly, sales of notebooks rose by 59 per cent to surpass 0.68 million units.

iSuppli, an electronics market research firm, predicts that the Indian audio/video consumer electronics industry will grow to US$ 6.59 billion by 2011, rising at a Compound Annual Growth Rate (CAGR) of around 10 per cent.

• E-commerce

Thanks to the broadband revolution, more Indians are spending ever more on the web. According to a global online survey by A C Nielsen, a staggering 78 per cent of Indians (who access internet) make purchase online, with credit cards being the preferred mode of payment. In fact, Indians have emerged as the third biggest credit card users globally for online purchases.

With such a large number of consumers showing a liking for online purchasing, the Indian consumer internet market is estimated to grow to US$ 2.32 billion by the end of 2007-08 from US$ 1.78 billion in 2006-07, recording a growth rate of 30 per cent, says a joint survey conducted by the Internet and Mobile Association of India [IAMAI] and IMRB.

Segment-wise online travel is the predominant category, accounting for 77.68 per cent of the total e-commerce market in 2006-07 and is expected to grow by 30 per cent this year.

• Automobiles

The Indian auto industry has grown at a CAGR of 14 per cent over the last five years with total domestic sales of vehicles reaching around 10.1 million vehicles in 2006-07. During April 2008 car sales witnessed a jump of more than 17 per cent in the car segment, while sales in the utility vehicle segment rose by 31 per cent, as compared with the corresponding month last year. Presently, India is the second largest two-wheeler market in the world, the fourth largest commercial vehicle market, the 11th largest passenger car market in the world, and is expected to be the third largest automobile market by 2030.

• Consumer Confidence

The Indian consumer remains one of the most upbeat globally. According to the AC Nielson Consumer Confidence and Opinion Survey, India is placed second in the 51-nation global survey. Also Indians are the most optimistic people regarding their personal finances (79 per cent) and second most optimistic people with respect to job prospects (86 per cent)-which opens attractive avenues for industries planning to tap Indian consumer market.

Source: India Consumer Durables Industry: Market & Opportunities – July 2008
a report by KPMG for Indian Brand Equity Forum