Branda in Consumer Electronics Sector

Consumer Electronics &
Appliance Industry in
India
Suresh Khanna
Secretary General
CEAMA
3rd April,2008
Growth of Consumer Electronics in India
1950s
Late 1960s
1982
1992
1993-94
1994-95
1995- Till Date
2001
2004
2005
2007
Radios-imported & Sold
B&W TV Transmission started in the country
Colour TV Transmission started in the country
Economic Liberalization Process initiated
Dismantling of controls such as licences, ban on use of
Foreign Brand Names etc.
Entry of MNCs – Panasonic, Sony, LG, Samsung etc.
Lowering of Import duties.
Cable TV Started
Entry of Many MNCs & Rapid Growth, continuous
lowering of Import Duties
Non Tariff Barriers on Imports removed.
Free Trade Agreement (FTA) with Thailand implemented,
resulting in reduction of import duties to 0% on Colour Television
sets, Colour Picture Tubes, Refrigerators and Air
Conditioners, thus more competition.
DTH Services Started
Entry of Organised Retail.
Households in the pyramid - 2007
Cat HHs
F 10 M
E 18
Incomes
> 25 K pm
< 25
160
D 23
< 15
C 46
< 11
B 73
< 7.5
A 29
<4
Households million
200
120
80
40
0
Pyramid in 2014
240 Cat HHs
F 20 M
E 29
Incomes
> 30 K pm
< 30
D 46
< 18
120 C 63
< 13
200
Households million
160
80
40
B 65
<9
A 09
<5
0
What they will buy will depend on the Value Proposition as seen by the Consumer
Brands in Consumer Electronics & Appliances
Sector
MNCs
National
Regional
LG
Samsung
Beltek
Hyundai
Whirlpool
TCL
Haier
Konka
)
) Korea
Onida
Videocon
Oscar
)
)USA
)
) China
)
BPL
Godrej
Philips
) Holland
Salora
Weston
T-Series
Bush
Crown
Jolly
Texla
Maharaja
Panasonic
Sharp
Sony
Hitachi
Sansui
Akai
Aiwa
)
)
)
) Japan
)
)
)
CEAMA
Colour Television
Production / Projection Figures
Projected
( In Million Nos. )
CEAMA
Refrigerator
Production / Projection figures
Projected
( In Million Nos. )
CEAMA
Air Conditioner
Production / Projection Figures
Projec
ted
( In Million Nos. )
CEAM
DVD Players
Production / Projection Figures
( In Million Nos. )
8
8
7.25
6
6
4
2.5
2
1
Projected
4.5
0
2003 2004 2005 2006 2007 2008
CEAMA
Washing Machine
Production / Projection Figures
Projected
( In Million Nos. )
Microwave Oven
CEAMA
Production / Projection Figures
Projecte
d
( In Million Nos. )
CEAMA
Set Top Box
Production / Projection Figures
( In Million Nos. )
10
10
8
7.5
6
4
2
3
1
2
Project
ed
5
0
2005 2006 2007 2008 2009 2010
Existing Penetration Levels
40
<1
40
35
30
25
19
20
15
8
10
7
5
2
<1
<1
2.5
0
CTV
REF
CTV
WM
REF
WM
AC
AC
VCD/DVD
VCD/DVD
MWO
MWO
Digital Cameras
Digital
Cameras
STB
STB
Source : Industry Estimates
Strength
• Increasing Demand :
TV’s, DVD’s, Smart Cards, Cellphones,
Air Conditioners, STB’s, Refrigerators,
Washing Machines, Microwave Ovens etc.
•
Market Potential :
Large & rapidly growing Consumer base :
320 -340 Mn.
• 9 percent per annum GDP growth
•
•
•
•
•
faulty Tax Policies (Exemptions) of
Govt.
Increased demand being satisfied by
Imports.
Weak Local Manufacturing base.
•
Gray market having larger share in
most of segments due to high TaxesVCD Player, Car Stereos.
•
Inverted duty structure discouraging
Manufacturing
Availability of Qualified/Skilled Manpower
Start up of EMS
Weaknes
s of Capacities due to
Fragmentation
•
India poor competetor to asian
Giants.
• Share of Electronic export market is
low. .
Road to Vision- India 2015
• Strengths:
¾ Skilled Low Cost Manpower
¾ World Class Standards of Productivity
¾ Adherence to Strict Quality Norms
- Six Sigma
- ISO 9000 approved
¾ Huge Domestic Market
Road to Vision- India 2015
• Opportunities
¾Placing India on Global Map for Hardware Brand India.
¾Creation of Jobs (7Million Direct,14 Million
Indirect by 2015)
¾US $ 10 Billion/annum Export earning for
India.
Road to Vision- India 2015
• Weakness
¾ Low Domestic Production
¾ Weak Component base.
¾ Low domestic demand - because of high level of
indirect taxes.
¾ Tax exemptions have led to fragmentation of
capacities resulting in higher production cost and
poor quality, thus higher prices.
¾ High Transaction Costs and Infrastructure related
issues- leading to higher costs.
Road to Vision- India 2015
• Threats
¾ Competition from China & South East Countries
¾ Competition from other emerging economies in Asia
& South America.
Accelerated growth in the consumer electronics &
Appliances sector can be achieved with following Policy Changes
⇒ Implementation of Goods & Sevices Tax, without further loss of time,
to make India one common Market.
⇒ Correction of anomalies in import duties, because of implementation of FTAs.
⇒ Making tax system simple and transparent to improve efficiency of tax administration,
leading to increased velocity of business
⇒ Withdrawing all tax exemptions; it will improve revenue of both Federal
and State governments
⇒ Lower total indirect tax incidence from the present level exceeding 30 % to less than
20 % It will result in increased revenue for both Federal and State governments..
⇒ Reforms, particularly in the power sector, need to be speeded up.
Rural electrification should be high priority task.
THANKS