The broad undertone in the economy is supportive for the consumer durables sector. Organization of Petroleum Producing Countries' or OPEC stated in its latest monthly update that India's economic growth in 1Q23 was reported to have stood at 6.1% y-o-y, representing a distinct improvement from growth rates of 3.3% in 3Q22 and 4.4% in 4Q22. Moreover, economic growth accelerated further in 2Q23, standing at 7.8% y-o-y. The latest release of 1H 23 economic growths for the Indian economy indicated a broad-based expansion across all sub-sectors, with the services sector continuing to post robust growth across financial, real estate and government services. India's economy has demonstrated robust resilience and is likely to have surpassed the performance of most major economies during 1H23.

Following stronger-than-anticipated growth in 1H23, leading indicators and output metrics indicate an ongoing favourable trend in 3Q23. As seen in many major economies, the services sector remains the primary growth driver for the economy, but India has also benefitted substantially from improvements in its manufacturing sector, with the latest PMI indicator from August pointing at a further acceleration. Some dampening factors in 3Q23, and probably towards the end of the year, may come from the recent pickup in inflation due to an unfavourable monsoon season, leading to rising food prices.

Smart Television Market Sees Impressive Growth In India

According to International Data Corporation (IDC) Quarterly Smart Home Devices Tracker, 4.5 million televisions were shipped to India in 1H23, an increase of 8% year-over-year (YoY). The frequent sales by e-tailers, multiple new launches/refresh model portfolio by vendors and clearing of old channel inventory, before the festive season starts, fueled the growth in the first half of the year. Share of the online channel grew by 25% in 1H23 YoY reaching 39% driven by online sales festivals. While the popular screen sizes of 32-inch and 43-inch remain mainstream with 71% collective share, the larger screens are gaining popularity. Share of the 55-inch went up to 12% from 9% a year ago in 1H23 resulting in 35% YoY growth in the USD$400+ price segment. The average selling price (ASP) of smart TVs stood at US$380 in 1H23, a 3% YoY decline. Brands are focusing on low priced models in the budget segment with regular price drops, resulting in share increase of sub-US$200 from 26% to 39% in 1H23.

Outlook:

The approaching festive season will bring in plenty of support for the domestic consumer durables segment given that the post pandemic recovery continues to hold sway. However, the overall mood in the spending could be dented, particularly in the rural segment due to the unsatisfactory monsoon and elevated interest rates. Finance Ministry has stated in a latest monthly update that the monsoon deficit in August could impact both Kharif and Rabi crops. The rains in September have erased a portion of the rainfall deficit at the end of August. However, the overall progress of kharif sowing is indicating a tepid projection for the crop output. As of 15 Sep 2023, kharif sowing (excluding cotton) is 0.8% higher than the corresponding period last year. The consumer food price inflation eased to 9.9% in August from 11.5% in July but holds near double digit.