The Hindu Business Line : Capital goods, consumer durables to see higher growth in Q1: FICCI

In the consumer durable sector, barring washing machines and black & white TV sets, all the segments are projected to grow between 10 and 25 per cent during the period.

New Delhi , May 8

THE capital goods and consumer durable sectors are poised to attain double-digit rates of growth in the first quarter of 2005-06, according to an analysis by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The analysis of select industries in the capital, basic & intermediate goods, and consumer durables & non-durables sectors carried out by the FICCI Research Division, reveals that all but one of the 18 capital goods segments are poised to record the growth rates ranging between 10 and 30 per cent in April-June 2005.

Likewise, in the consumer durable sector, barring washing machines and black & white TV sets, all the segments are projected to grow between 10 and 25 per cent during the period.

This has given rise to high expectation of strong growth impulses being transmitted to the basic goods and intermediate goods sectors through a rise in investment demand and consumption demand, provided oil prices hold or do not rise significantly in the short term.

The basic goods sector is the biggest segment in the Index of Industrial Production (IIP) with a share of 35.6 per cent, followed by consumer durables and non-durables (28.7 per cent), intermediate goods (26.5 per cent), and capital goods (9.3 per cent).

The FICCI analysis reveals that in the capital goods sector, the tractor segment tops the list with a projected growth rate of 30 per cent in April-June 2005, followed closely by transformers, power transformers, distribution transformers, transmission line towers, and construction equipment industry (25-30 per cent).

High growth rates are also set to be recorded in circuit breakers, capacitors at 20-25 per cent followed by electric equipment and machinery (20 per cent), telecom cables (15-20 per cent), textile machinery (14-16 per cent) and energy meters, pipe industry and industrial valves (10-15 per cent).

Oil & gas equipment and power cables will also witness a double-digit growth at 10-12 per cent and 10 per cent, respectively.

In the consumer durables sector, personal computers are set to record the highest rate of growth at 30 per cent, followed by microwave ovens and DVDs (25 per cent), air-conditioners (20-25 per cent), VCDs/MP3 (20 per cent), colour TV sets (15-20 per cent), automobile industry (15-17 per cent), refrigerators (10-12 per cent), tyres (10-11 per cent), watches, clock and leather & leather products (10 per cent), and washing machines (5-10 per cent).

However, B&W television sets are expected to see a negative growth rate of 20 per cent during the first quarter of the current year.

These numbers for the capital goods and consumers durables goods sectors herald good times ahead for the basic goods sector in Q2 and beyond.

In the first quarter (April-June 2005-06), barely four of the 16 basic goods segments are slated to record double-digit growth rates.

These are speciality chemicals (15-20 per cent), hydroelectric power (14-15 per cent), nitrogenous fertiliser and paints (10 per cent).

The other basic goods segments are expected to witness lower rates of growth.

Aluminium is projected to post a growth of 8-10 per cent, refinery 8.3-8.5 per cent, basic chemicals 8 per cent, cement 7-8 per cent, steel 5-6 per cent, electric power generation 5.5 per cent, thermal power 4-4.5 per cent, crude oil 2.5-3 per cent, caustic soda 2.5 per cent, and soda ash 1.5 per cent.

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