India, New Delhi, November 20: According to a research by the Confederation of Indian Industry (CII) and EY India, the consumer durables sector in India has enormous development potential since electric appliance penetration is lower than the worldwide average.

According to the research, growing prosperity, changing lifestyles, and shifting consumer tastes are driving substantial domestic consumption potential.

It said that “Lower penetration levels for appliances compared to the global average and per capita spend in India highlight significant growth potential in domestic consumption” .

According to the report’s findings, India’s penetration of major electric appliances is still considerably below international norms. As of FY24, for example, just 10% of Indian houses have air conditioners, compared to 68 percent in China, 38 percent in Thailand, and 80% in Malaysia.

In a similar vein, just 35% of Indians own a refrigerator, compared to 96% of Chinese people.

In the last ten years, household consumption in India has doubled, indicating a rising need for consumer goods.

Rural regions had an increase in Monthly Per Capita Consumption Expenditure (MCPE) from Rs 1,430 in 2011–12 to Rs 3,773 in 2022–23. Over the same time period, it increased from Rs 2,630 to Rs 6,459 in urban regions.

Shorter replacement cycles and rising expenditure are fueling the market’s need for high-end, value-added items.

The high Goods and Services Tax (GST) rates on some goods are among the difficulties facing the consumer durables sector, according to the research. It said that since air conditioners are considered luxury products and are subject to a 28% tax, the industry’s expansion is hampered.

However, air conditioners are becoming more and more necessary due to climate change and an increase in heatwaves. Equitable GST rates for mobile phones and air conditioners might increase affordability and ownership for people of all income levels.

The consumer durables industry in India, which now accounts for about 0.6% of the nation’s GDP, is expected to increase at a compound annual growth rate (CAGR) of 11%, reaching Rs 3 lakh crore by FY29, according to the research.

It is anticipated that industry participants would take advantage of these tendencies as India’s market develops, promoting more innovation and inclusion in the consumer durables sector.