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Domestic Consumer durables output continued to slide on a monthly basis in November 2024. The industrial production index for consumer durables stood at 120.50 in November, down 7.31% compared to previous month. However, the index spiked 13% compared to November 2023. A part of this monthly decline could be traced to tepid consumer sentiments and weak economic growth. Indian consumers’ confidence about general economic situation, employment scenario, their income and spending have weakened, according to the latest survey of the Reserve Bank of India (RBI). Consumer confidence for the current period declined marginally owing to weaker sentiments across the survey parameters except household spending. The current situation index (CSI) moderated by 0.7 points to 94 in November 2024 from 94.7 in September 2024. Amid this scenario, the sector needed a positive policy response and the Union Budget 2025 seems to have provided it quite aptly.
Union Budget 2025 offered a significant boost to the overall consumption demand by cutting income tax outgo for individuals and provided a rounded perspective towards inclusive growth. The consumer durables sector has faced challenges in recent months due to softened urban demand, inflation, and liquidity issues, weighing on corporate earnings. While it will endure cautious demand dynamics, overall outlook is bound to turn supportive for the sector from hereon.
Impact of Union Budget 2025:
Finance Minister Nirmala Sitharaman stated that no income tax till to be payable upto income of Rs 12 lakh annually. Individuals earning up to Rs 12 lakh annually will not have to pay any income tax under the new tax regime as FM gave relief to middle class by raising exemption limit and rejigging slabs. Finance Minister Nirmala Sitharaman said that the middle class gives strength of India’s growth and the Government has periodically hiked the ‘Nil tax’ slab in recognition to their contribution. She said the proposed new tax structure will substantially boost consumption, savings and investment, by putting more money in the hands of the middle class.
Finance Minister Nirmala Sitharaman said in her Budget speech today that the customs duty on interactive and flat panel displays will rise from 10% to 20%, while the duty on Open Cell and related components will reduce to 5%. This increase in customs duty will rectify the inverted duty structure, keeping it in alignment with the government’s Make in India policy.
It will discourage the use of imported panels and encourage local manufacturing of television panels. The announcement is expected to reduce import volumes for IFPD as sales of smart televisions grow rapidly with the market likely to reach roughly $19 billion by the end of this year, according to the Indian Cellular and Electronics Association (ICEA).
Outlook:
The Economic Survey 2025 noted that the domestic production of electronic goods has increased substantially from Rs 1.90 lakh crore in FY15 to Rs 9.52 lakh crore in FY24, growing at a CAGR of 17.5 per cent. It observes, programmes such as Make in India and Digital India, along with improved infrastructure, ease of doing business, and various incentives, have boosted domestic manufacturing and drawn foreign investments. The survey also states that consumer-focused sectors like automobiles, electronics, and pharmaceuticals have emerged as growth drivers. Given the increase in disposable income post the budget, white goods will likely see a good demand push. An immediate effect of this will be seen in the demand of ACs in coming summer season. The expansion of MSME sector benefits, including easier access to credit will also push up demand across a number of consumer durables in semi urban areas.
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