Indian consumer electronics market to expand at a CAGR of 16% through 2016

Spending within the Indian consumer electronics market will grow by approximately 17% in US dollar terms in 2012 to US$32.9 billion, driven by rising incomes and growing affordability.

Spending on consumer electronics devices is projected to grow at an overall compound annual growth rate (CAGR) of 15% through to 2016, with the key segments including low-cost mobile handsets, colour TV sets, set-top boxes and notebook computers.

PC market growth rebounded in Q2 2012, despite a background of rising inflation and a weak rupee, which had led many consumers to defer their purchase decisions. Only nine out of 1,000 people in India own a computer, one-fifth of the level in China.

In 2013, strong growth opportunities are expected across the next 200-400 smaller cities in India, where vendors are expanding their retail and distribution presence. Around 45% of new PCs sold in the Indian market are now shipping outside the top 75 cities.

The government's policy of providing tax breaks and subsidies for hardware manufacturers should help keep PC prices down and support growth. Meanwhile education procurements such as those being implemented by Tamil Nadu state and others, will also drive volume sales.

Tier two and tier three Indian cities also offer significant growth opportunities for handset vendors as prices of entry-level feature phones and smartphones come down. Meanwhile, two thirds of India's population reside in rural parts of the country and the telecoms network still only connects about 4,500 towns and cities, and 65,000 villages in the country.

In order to expand network coverage, India's mobile operators are extending their infrastructure to rural parts of the country. This is expected to raise penetration rates significantly over the next few years.

Multi-national companies (MNCs) with superior technology and better quality control account for a market share about 70% of the overall consumer electronics market in India and maintain a strong hold on the urban middle class segment growing at about 12% to 15%.

With increased mobility of people across India in terms of work, the independent electronics specialists no longer enjoy the trust that they used to benefit from in the past because of years of service. The young generation is more comfortable shopping at exclusive company outlets or chained electronics specialists where such consumers can choose from the latest models, see demos and choose the model and brand as per their need without being pushed by a salesman.

The changing lifestyle of people in India is having a significant impact on the consumer electronics market in India. Categories like digital TVs, converters, decoders and receivers, computers and peripherals, in-car entertainment devices and mobile phones are witnessing robust growth as they are status symbols.

However, categories like video players and home audio and cinema are witnessing slow or declining growth rates as people are spending less and less time at home.

For more information on the Indian consumer electronics market, see the latest research: Indian Consumer Electronics Market

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