The undertone in the domestic consumer durables segment is mostly supported. Consumer confidence among Indian households continued to improve in November even though it remained in the pessimistic zone, the Reserve Bank of India (RBI) said in its consumer confidence survey. Consumer confidence for the current period has continued on its recovery path after the second wave of the covid-19 pandemic, though it remained in the pessimistic zone; the current situation index (CSI) improved further on account of better perceptions of the general economic situation, employment and household income," the central banker said.The survey, conducted between 2 November and 11 November and covering 6,089 responses, mapped current perceptions among consumers and one-year ahead expectations on the general economic situation, employment scenario, overall price situation and own income and spending across 19 major cities.

The retail sector saw leasing momentum recover in March 2022 on the back of an increase in footfall, sales, and rent concessions being discontinued. Mall supply of around 2.5 million sq. ft is estimated to be completed in 2022, according to JLL's Year ender ‘The 2022 story: Indian real estate's rise from the lows.'In 2023 mall supply of around 10 million sq. ft is expected to get operational with 25 new malls entering the market across the top seven cities of India (Delhi NCR, Bangalore, Hyderabad, Mumbai, Pune, and Kolkata). Leasing demand for sectors such as F&B, electronics, jewellery, athleisure, casual clothing, formal wear, accessories, and beauty and cosmetics is increasing. With the introduction of new entertainment categories programming and the total removal of all Covid-related limitations, the entertainment category, including multiplexes, enjoyed a robust comeback in business beginning in March 2022.

The overall mood in consumer durables is likely to be supportive given the optimism in housing sector. The housing market in India is expected to close the year 2022 on a high. Sales of housing units hit a record high aided by resilient economic activity and strong consumer sentiment for home ownership further fueled by the pandemic experience, according to Knight Frank Research, media reports noted. The sales for the top eight Indian real estate markets were over 2.32 lakh units in the first 9 months of CY22. With this, the industry has surpassed the sales witnessed in the pre-pandemic months. In fact, the sales witnessed in the first 9 months have been higher than full-year sales in 2017. The traction witnessed in the first three quarters of this year suggests 2022 will undoubtedly set multiyear high for the industry. A large percentage of home sales are bank-financed, and consumer sentiment is slightly affected due to rise in interest rates, but the silver lining is that rate increase has been front loaded and most of the rate hike or inflation concerns should start to settle soon.Going forward, the current retail inflationary pressures are expected to ease with pass-through of lower input costs to consumers, also affirmed by the Reserve Bank of India's inflation projections for the next two quarters, the MER stated. This is shaping up well for the consumer spending. Meanwhile, flagging the need to revive consumption demand in the economy, the Confederation of Indian Industry (CII) has urged the government to reduce personal income tax rates to increase households' spending power in Union Budget 2023-23, slash the 28% GST rate on some consumer durables, and engender job creation in the rural areas.

Outlook:

The overall undertone in spending is likely to be supportive in India as households continue to get adjusted to the normalcy in the economy though rising interest rates may pose some challenges in coming months. However, for white goods, the undertone is generally supportive. Smartphone shipment in India is projected to grow 10% year-on-year (YoY) in 2023 after an estimated decline of 5% this year, according to a new report by Counterpoint Research. The total number of smartphone shipments in 2023 is expected to reach 175 million.