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Outlook for Consumer Electronics in 2019

The consumer electronics (CE) industry in India is expected to become the fifth-largest in the world by 2025. In the past few years, there are several home grown brands which have mushroomed up against the already-established international brands, and several others that are eyeing the Indian market aggressively. One of the biggest factors that has helped the Indian CE brands gain confidence has been the incorporation of Goods and Services Tax (GST). It has helped create a level playing field, enabling home-grown brands to become competitive. Furthermore, the drivers contributing to the growth of this market relate to increasing levels of income, urbanization, improved affordability of products, product innovation, availability of newer variants, easy consumer financing, and rise in the share of organized retail.

India today is gaining traction, as a competitive alternate to China for electronics manufacturing. In terms of the manufacturing value chain, favorable government policies, Make in India policies, and rising costs in China are the key factors for the rise in local outsourced manufacturing. Increasing local value addition levels and growing investment has led to a manifold jump, as an increasing number of OEMs are foreseeing the localization of their products in India. Having said that, the Indian manufacturers are facing challenges, such as inverted duty structure due to free-trade agreements, which makes them uncompetitive for white goods. The hiked excess duties, under-developed and insufficient local supplier base, and high cost of manufacturing and capital costs owing to frequently changing energy efficiency requirements also contribute to this scenario.

The market is huge and still untapped. Currently, the white goods industry in India is highly concentrated. In washing machines and refrigerators, top five players have more than 75 percent market share, while in air conditioners it is around 55–60 percent. There is a lot of scope for growth from rural markets, with consumption expected to grow in these areas as penetration of brands increases and as the government plans to invest significantly in rural electrification. Among the CE Industry, the TV market represents the biggest category with overall penetration of 60 percent in the country. Rising popularity of OLED and 4K televisions, followed by the declining prices of these devices across various regions, is expected to drive the CE market. In addition, with the growing replacement rate of traditional televisions, adoption is expected to increase over the years. The launch of televisions with new and advanced features, such as built-in Wi-Fi, internet connectivity, ultra-high resolution, Dolby vision and Dolby Atmos to deliver outstanding picture and sound quality, further contributes to the industry demand. Growing demand for energy-efficient appliances, and increasing replacement of older electric household appliances, is expected to have a positive impact on the CE market growth.

Increasing prominence of advanced and wireless technologies is expected to drive the personal CE market. Emerging trend of smart TVs, app-based control, and sensing capabilities will lead to replacement of traditional equipment with smart devices. With TV technology constantly improving and developing new functionalities, developers are making themselves increasingly more aware of app trends and viewing preferences, ensuring that smart TVs provide all the apps and functionalities that consumers could ever dream of. Increased security, easy to control, on-demand TV, effective interfaces, and HDR TVs shall define the smart TVs in India. Another noted trend, shall be the artificial intelligence (AI) technology. AI-powered TVs shall change the way we perceive entertainment. AI techniques like face recognition, and personalized video or song suggestions infused into television sets give the consumers a richer experience. In the upcoming age of AI televisions, we could have TVs giving personalised recommendation based on age group and even see or sense how engaged the viewer is in the program on TV, and study his reactions. As delivery systems become more and more intelligent, every viewing experience could be all synchronised and AI-enabled televisions would soon become as popular and regular as the HD and 4K TVs today.

Lastly, globalization and fast industrialization, supported with technology in the Asian economies, will help new entrants to break through the ranks with technology-led products or play the price card to disrupt the market.

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