The Hindu Business Line : `Price fall spurs sale of consumer goods'

THE consumer durables industry growth rate in production has been more in terms of volume rather than value for a number of products, according to a Federation of Indian Chambers of Commerce and Industry (FICCI) survey.

"This has happened due to constantly falling prices over the years due to competition among the major players, aggressive marketing strategies and declining import tariffs," it said.

Manufacturing quality products with superior technology has helped the industry achieve this. The overall survey has shown buoyant trends in all three segments - white goods, consumer electronics and electronic components during April-March 2003-04.

The survey confirms higher growth rates for some categories such as white goods, consumer electronics and electronic components for 2003-04 compared to the previous year.

The sectors which have recorded double digit growth in terms of the quantity produced are air-conditioners, microwave ovens, colour televisions, VCDs/DVDs, watches, colour picture tubes, glass shells for picture tubes, printed circuit boards (PCBs) and tape recorder components.

The products that have recorded single digit growth are refrigerators, washing machines, clocks and colour deflection components.

One of the salient features identified for the development of the industry is the removal of licensing restrictions. This has encouraged capacity addition by both the domestic and multinational companies. Competitive strategies revolve around strong brand differentiation and prices.

Further, the share of the unorganised segment had come down sharply to only 8 to 10 per cent from 40 to 50 per cent because of growth in production in the organised segment and availability of branded products due to lowering of import duties and other liberal measures, the survey revealed.

The price differences between branded and unbranded goods had narrowed down due to branded players providing good after sales services, it said.

As per the survey, MNCs have an edge over their Indian counterparts in terms of technology and a steady flow of capital. The domestic companies compete on the basis of their well-acknowledged brands, an extensive distribution network and an insight in local market conditions. Bargaining power of customers is high due to the availability of multiple brands.

Rural India, which accounts for nearly 70 per cent of the total number of households, offered plenty of scope and opportunities for the white goods industry, the survey said.

The urban consumer durable market for products including TV is growing annually by 7 to 10 per cent, whereas the rural market is zooming ahead at around 25 per cent annually.

Attractive consumer loan schemes with reduced interest rates over the years by the financial institutions and commercial banks and the hire-purchase schemes have added to the surge in demand.