Mumbai, India – May 21, 2014 - As per the Index of Industrial Production for November, the production of the consumer durables – including automobiles and others like appliances, electronics, and even gems and jewelry declined to about 21.5%. A study of the consumer durables industry in India shows that even though 2013 had seen major surges in production of consumer durables, this is the first time in seven years that the index recording has fallen to such levels. The major contributors to the decline were automobiles (31.4%) gems and jewelry (17.6%) and home appliances (4.2%). The government too is not doing much to lift its import curb on gold which means that the scenario is unlikely to improve even in the upcoming years as per the Indian consumer durables market research.
The demand has been weaker than expected which was fuelled by the shadow effect of low activity due to sharp drop in gold imports which is the basic raw material of the segment. Meanwhile the demand for the auto and appliances has been weak as customers deferred their purchase during this slowdown period mainly because of price hikes. Research from the Society of Indian Automobile Manufacturers further shows the car sales fell by 9.6%. According to the consumer durable industry, this low demand has led the companies to cut down on their productions rapidly.
The consumer durable market already saw a slow growth in home appliances in 2013 due to the price increase and depreciation of rupees against dollars. Prices of washing machines, refrigerators, air conditioners and microwave ovens were increased more because more than 75% of companies imported major components that are needed in the production of these appliances.
Market analysts are not expecting the situation to improve in the upcoming years because commodity inflation remains a challenge. Furthermore, the rupee is still weak against the dollars and new energy labelling norms being introduced at this time of year will definitely see more price hike.
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