India's Consumer Durables Market Faces Third Price Hike Amid Global Cost Shocks

The Indian consumer durables market is facing its third price hike of the year ahead of the festive season, with major appliance makers like LG, Daikin, Voltas, Samsung, and Godrej raising prices by up to 10%. The increase is attributed to a global cost shock intensified by the West Asia crisis. Copper costs have risen by 34% this year, resin by 17%, steel by 24%, and aluminium by 16%, contributing to higher logistics and energy expenses.

The price hikes come at an inopportune time, as Navratri and Diwali account for around 25-30% of the annual consumer-durables off-take. Manufacturers had initially hoped to restrict pre-Diwali increases to around 2-3%, but input costs have continued to rise. In the three months preceding the latest round, copper prices increased by about 10%, aluminium by 5%, steel by 13%, and resin by 18%.

India's localisation problem is a significant concern in this context. The more India imports, the more global inflation enters the Indian appliance market. A recent BCG-CII report estimates that India's consumer-durables market will reach Rs 3-3.25 lakh crore by 2030, growing 8-10% annually. However, localisation of the bill of materials varies from only 25% to 70% across categories.

The government is trying to address this issue through various policy efforts, including the Electronics Component Manufacturing Scheme (ECMS) and the White Goods PLI. The ECMS aims to build domestic capacity in components across electronics, while the White Goods PLI focuses on building an AC and LED-component ecosystem to raise domestic value addition from 20-25% to 75-80%.