|Global economic slowdown in 2008 led to a rather lackluster year for most key industries in India due to lower economic growth. 2009 brought cheers to the industrial and manufacturing sectors, and consumer market also saw a revival of growth.
In 2008, automobile market barely grew, but 2009 brought a complete turnaround with a stupendous growth of about 26%. Growth in 2010 was expected to be rather modest but the growth story continues as the large middle class population and easy finance continue to drive two wheeler and car growth. The decade from 2000 ending till March 2010 has shown an average growth of 12%. Growth in the next decade will continue and is estimated at 12-14%, if not higher. Indian market is supplied by about 16 automobile manufacturers that also include all major global automobile players who have a manufacturing base here. The three major automobile suppliers in India are Maruti Suzuki, followed by Hyundai and Tata Motors. Tata Motors is the leader in commercial vehicles while both Maruti Suzuki and Hyundai have leading positions in small car sectors. Maruti Suzuki has the largest market share in cars in India.
The Indian consumer durable industry showed an excellent growth of 30% in 2009. TV and refrigerators were the two consumer durable products that saw a stupendous growth in 2009. Changing lifestyle, higher disposable income, greater affordability, boom in the real estate and housing industry were the major driving forces for consumer durable growth in India during the last few years. Increasing prosperity and growing rural economy also contributed to higher sale consumer durable products in India. As per Consumer Electronics and Appliances Manufacturers Association, (CEAMA), Q1-2010 saw phenomenal sales especially of displays which include conventional flat panel displays (PDPs, LCDs and flat screen TVs). The industry also witnessed a 40% growth in home appliances business. Changing lifestyle, higher disposable income coupled with greater affordability, boom in the real estate and housing industry and a surge in advertising has been instrumental in bringing about a sea change in the consumer behavior pattern.
Higher power generation led to good growth in the electrical industry in 2009. Cable industry showed an overall growth of 12% mainly due to 14.5% growth in power cable segment, on higher demand from industrial projects. The electricals industry grew by over 11% during 2009-10 sending strong signs of economic revival as per Electric Monitor. The industry was in the grip of the slowdown clocking a measly growth of 2.7% in 2008-09, which was the slowest growth in the past five years. Striking back with a double digit growth in FY-10, the electrical industry appears set for an even more encouraging growth in the coming years, thanks to generous government plan outlays in the power and infrastructure sectors, and with momentum returning to the real estate sector. Although FY-10 saw double-digit growth, growth was concentrated in the second half of the year. According to a study by Indian Electricals & Electronics Manufacturers' Association (IEEMA), the industry grew by a feeble 1.7% in H1 of FY-10 (April to September) but bounced back with a 20% growth in the second half. Among the major industry segments, switchgears recorded the highest growth of 14.5%, followed by rotating machines (motors) with 13.3%, cables with 12.1% and energy meters with 11.3%. Prospects for electrical equipment manufacturers are indeed bright due to the perceived high demand from both the power and industrial sector. For the next 5-7 years, India is expected to add around 18,000 mw of new power generation capacity per year, which would also need matching T&D infrastructure. Industry experts feel that most of important electrical equipment segments like cables and transformers are in most likelihood going to double in size over the next seven years or so.
In recent years, the Electronics Industry in India is growing at a brisk pace. In 2006-07, it was worth US$32 bln, and has the potential to reach US$150 bln by 2010 as per Corporate Catalyst India. The largest segment is the consumer electronics segment. While is largest export segment is components. The electronic industry in India constitutes just 0.7% of the global electronic industry. However demand in the Indian market is growing rapidly and investments are flowing in to augment manufacturing capacity. Output of the Electronic Hardware Industry in India was US$11.6 bln in 2006-07. India exports a vast range of electronic components and products for Display technologies, Entertainment electronics, Optical Storage devices, Passive components, Electromechanical components, Telecom equipment, Transmission & Signaling equipment, Semiconductor designing, Electronic Manufacturing Services (EMS). This growth has attracted global players to India and leaders like Solectron, Flextronics, Jabil, Nokia, Elcoteq and many more have made large investments to access the Indian market. In consumer electronics, Korean companies such as LG and Samsung have made commitments by establishing large manufacturing facilities and now enjoy a significant share in the growing market for products such as Televisions, CD/DVD Players, Audio equipment and other entertainment products. The growth in telecom products demand has been breathtaking as India adds 2 million mobile phone users every month. With telecom penetration of around 10%, this growth is expected to continue at least over the next decade. Penetration levels in other high growth products are equally high and growth in demand for Computer/ IT products, auto electronics, medical, industrial, as well as consumer electronics is equally brisk. Combined with low penetration levels and the Indian economy growing at an impressive 7% pa, the projection of a US$150 bln+ market is quite realistic and offers an excellent opportunity to electronics players worldwide.
Consumer electronics (durables) sector continues to be the main stay of the Indian electronic industry contributing about 32% of the total electronic hardware production. By the end of 2005-06, the market for consumer durables (including entertainment electronics, communitarian and IT products) was Rs 180 billion (US $4.5 bln). The market is expected to grow at 10-12% pa and is expected to reach Rs 60 bln (US$13.3 bln) by 2008. The urban consumer durables market is growing at an annual rate of 7-10%, the rural durables market is growing at 25% pa. Some high-growth categories within this segment include mobile phones, TVs and music systems. With sound macroeconomic condition and buoyant buying sentiment in the market, PC sales touched 6.5 million units during 2006-07. The high growth in PC sales is attributed to increased consumption by Industry verticals such as Telecom, Banking and Financial Services, Manufacturing, Education, Retail and BPO/IT-enabled services as well as major eGovernance initiatives of the Central and State Governments. Significant consumption in the small and medium enterprises and increased PC purchase in smaller towns and cities was witnessed during the year. It is expected that increased Government focus on pan-India deployment of broadband at one of the lowest costs in the world will soon lead to accelerated PC consumption in the home market. The growing domestic IT market has now given impetus to manufacturing in India. The year witnessed not only capacity expansion by the existing players, but also newer investments in hardware manufacturing. India is also high on the agenda of electronics manufacturing services companies.