Appliances industry aims 2-digit growth in 2023

New Delhi: Bolstered by premiumisation trends, pent-up demand and policy initiatives, the country's appliances and consumer electronics sector expects to continue on the double-digit growth trajectory in 2023, as companies seek to expand capacity and roll out new-age smart products. Learning the hard way in the wake of the global supply chain disruptions caused by the coronavirus pandemic and prolonged lockdown in China, leading companies in the sector are focusing on enhancing production capacity as well as domestic supply chain to reduce dependence on imported components.

All said, geopolitical developments and rupee depreciation could have an adverse impact on companies. Appliances & Consumer Electronics (ACE) industry body CEAMA is "optimistic about good growth in 2023 as well" and expects to almost double the value of the industry in the next three years to Rs 1.48 lakh crore by 2025, as well as make the country an alternative hub for exports. In 2022, ACE industry logged an overall value growth of around 35 per cent, led by an unprecedented rise in sales of cooling products such as residential air conditioners and higher festive sales in the second half of the year. Strong demand for mid and premium products also helped the sector, which was significantly hit by the pandemic. Notwithstanding worries about rise in raw material input costs amid inflationary challenges due to the current geopolitical situations, the industry anticipates increased business opportunities, especially since there is likely to be demand for several appliances.

"We expect the summer of 2023 to be buoyant, with a strong summer driving pent-up demand. We are bullish about a good summer, which begins at the end of February and lasts till the end of June. In the long-term, the Indian AC market is expected to grow at a double-digit CAGR during the FY21-FY26 period," Voltas MD & CEO Pradeep Bakshi said.

The industry will continue to focus on new innovative, health and environment-friendly products. Changing lifestyle along with increased affordability will fuel market growth, according to Voltas which sold a record 1.6 million units of residential ACs from January till November 2022. The Tata group firm is investing around Rs 1,000 crore, out of which Rs 500 crore will be for the RAC (Refrigeration and Air Conditioning) plant and Rs 500 crore for the ancillaries, including compressors. Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Eric Braganza said that with the thrust on building domestic manufacturing capabilities through PLI (Production-Linked Incentive) schemes for promotion of domestic manufacturing of air conditioners and PMPs (Phased Manufacturing Programmes), the industry expects not to be dependent in the coming years on the vagaries of foreign supply chains and dollar fluctuations that affect prices and operating margins.

"Additionally, with the growth in the domestic market, manufacturing will achieve economies of scale, which will contribute in making India an alternative export hub for the rest of the world," he said. Overall, the industry is expected to grow 10-15 per cent in FY 2023-24, Godrej Appliances Business Head and Executive Vice President Kamal Nandi said. The Godrej & Boyce group firm is anticipating a 20 per cent growth in this period, which will be primarily led by the premium segment.