Opportunities and Challenges
in Consumer Electronics &Home Appliances

Message from President CEAMAThe country is passing through a slow-down with economic growth coming down.
Our sector is greatly affected by the general economic conditions in the country. The
slow economic growth has affected our sector in adverse manner and has
decelerated the growth of the sector.
The demand of electronics in the Indian market is projected to rise to US $125 billion
in next 2-3 years and US $ 400 billion by 2020. To ensure that supply keeps pacewith the increase in demand, the industry and the Govt. need to work together, tomake the Indian industry competitive.
This Research Paper is an effort to make all the stake holders, specifically Electronic
industry & Policy Makers aware of the opportunities & Challenges in Consumer
Electronic & Home Appliances sector. I am sure that this research paper will be auseful document for both.

Anirudh V DhootMessage from General Secretary, CEAMA

The Home Appliances and Consumer Electronics sector has witnessed a substantial
growth since the process of liberalization began. This sector is an important part ofthe economy of the country and has played a vital role in providing employment tomillions of people and also improving the quality of life of people in the country.
With the current economic slowdown the sector is facing sluggish growth and all of
us are feeling the pinch, but I am sure that this is a temporary phase and soon theeconomy will be back to 8%+ growth and the sector will be back to double digit
growth. The rapid technological developments will act as a catalyst to the growth ofConsumer Electronic sector and will touch the figure of USD 400 billion by the end of
next five year plan.
I am confident that this research paper will serve its purpose of generatingawareness in the industry about the current and future trends in Consumer
Electronics & Home Appliances.

Suresh KhannaMessage from Dr. Srini Srinivasan, Arthur D. Little

We are proud to be associated with CEAMA as their Knowledge Partner for the
study on “Opportunities & Challenges in Consumer electronic & Home Appliances inIndia” on 14th December, 2014.
Based on our 127 years of global experience, we are confident that the home
appliances sector in India will define a courageous path forward towards profitable
and world-class manufacturing ecosystem. We wish the Annual Function muchsuccess.

Dr. Srini Srinivasan
Managing Director, Arthur D. Little India

ABOUT CEAMA:
Consumer Electronics and Appliances Manufacturers Association (CEAMA), wasestablished in 1978 is an all India apex body of Manufacturers of Consumer
Electronics and Home Appliances, a Rs.45, 000 crores industry. CEAMA acts as acatalyst in the promotion of Industry, trade, technology and entrepreneurship.
The membership spectrum comprises of Domestic Companies and MNCs, andincludes large, medium & small-scale sectors. All leading brands in Consumer
Electronics and Home Appliances viz. Videocon, Samsung, LG, Onida
Panasonic, Philips, Toshiba, Haier, IFB, Whirlpool, Godrej, Lloyd, Voltas, Ahuja,
Onkyo, BSH Household Appliances, are members of CEAMA.
CEAMA is an Industry Chamber which is recognized by ‘Department of Electronics
and IT (DeitY)’ in India. Recommendations and suggestions of CEAMA are given
due consideration by the Government of India in formulating union budget andimplementing new policies for the Indian electronics sector. It works closely with thevarious Ministries / Departments of Central and State Governments on all mattersrelated to growth and development of the sector and functions as an interface
between the government and industry, manifesting industry’s concern to thegovernment and sensitizing the businessmen about the policy changes brought out
by the government.

Table of Contents
1. Executive Summary
2. Introduction
2.1 Background24

2.2 Objectives/Scope of the report

3. Consumer electronics
3.1 Overview

5

3.2 Penetration levels of consumer electronics
3.3 Market sizes and growth rates
3.4 Manufacturing of consumer electronics in India
3.5 Swot Analysis

4. Home appliances

9

4.1 Overview
4.2 Penetration levels of home appliances
4.3 Market sizes and growth rates
4.4 Manufacturing of consumer electronics in India
4.5 Swot Analysis

5. Impact of WTO and FTA’s
5.1 Free Trade Agreements (FTAs) with the ASEAN Countries

13

5.2 Problems with the current structure
5.3 Possible solutions

6. Conclusions and Recommendations

17

1

Executive Summary
The global economic turbulence that characterised the past few years is
expected to ease off by 2014. The Indian economy performed well even under
economic duress and conditions improved alongside a recovering global
economy. India registered a robust economic growth rate of 5% in the financial
year 2012-13 and demand for consumer appliances would continue to surge
further. The steady economic growth will continue to provide consumers withhigher disposable income and benefit those seeking to upgrade their lifestyles.
A robust 400 million Indian middle class with growing disposable incomes has
been instrumental in driving demand of various consumer electronic devices.
Price pressures due to high inflation, fuel costs, a weakening rupee and rising
input prices will remain major concerns for manufacturers.
Low household penetration (well below world average) of appliances in India
will provide opportunities for companies to expand their reach. Expansion ofmodern retail and exclusive company outlets across regions is expected toincrease the penetration of Home Appliances. Appliances are expected to post
strong growth even in non-metro cities (tier two & three cities & rural areas).
Other factors fuelling double digit growth of consumer appliances in India arerise in double-income nuclear families, easy availability of credit, changing
lifestyles, introduction of new models, and increasing consumer awareness.
A large number of consumer electronics and home appliances wereincreasingly imported towards the end of the year 2013. Importing products
into India proved to offer good quality products, and turned out to be more
economical than manufacturing these products within the country. As such,
more manufacturers opted to continue following the import route. Better
quality products were available to consumers at lower prices as the quality
offered by smaller players improved substantially due to imports and prices
not appreciating proportionally. Hence, smaller regional manufacturers who
are mostly involved in trading of products manufactured in China are expected2

to provide stiff competition to their larger national counterparts in the coming
years.
However, the 2013-14 Budget had no specific proposal pertaining to thehousehold appliance industry. The increase in excise duty and service tax from
10% to 12% in the Union Budget of 2012-13 had an immediate impact on end
consumers across all demographics.
There is a definite lack of proper electronics eco-system in India as almost 6070 % of the inputs in major appliances such as LED TV’s have to be imported.
This is a big handicap and adds to the cost of manufacturing final product. Thisis further exacerbated by the FTA’s with ASEAN countries and the heavy
taxation in India. Unless the situation is corrected, it is likely that by 2020, theelectronics import may far exceed oil imports reaching USD 300 billion.
There are various short term and long term solutions which need to be looked
into to boost the eco-system of the consumer appliances in India. This is a big
handicap and adds to the cost of manufacturing final product. We need to takesome concrete steps today, to define a profitable path for consumer
appliances eco-system in India.

3

Introduction
Background
Consumer durables’ is one of the fastest growing industry segments in India.
This sector attracted significant investments even during global recession.
During FY03-FY13, the industry expanded at a healthy CAGR of 13 per cent.
Urban markets account for the major share (65 per cent) of total revenues in
the consumer durables sector in India. Rural markets are expected to grow at acompound annual growth rate (CAGR) of 25 per cent. Also, increasing
electrification of rural areas would augment the demand. 100% FDI is allowedin the electronics hardware manufacturing sector under the automatic route.
Since, India has been trailing behind ASEAN countries in terms of production,
quality and export of consumer appliances, performance levels of most offactors of production such as quality manpower, capital investment,
infrastructure, technology etc., need to be enhanced through conscious policy
interventions and managerial action to boost competitiveness of the sector. In
this context, an attempt has been made to understand the productivity andcompetitiveness of consumer appliances eco-system in India and recommend
policy solutions to make the sector internationally competitive. The study also
attempts to identify the factors hindering the progress of the sector andsuggest measures for enhancing the competitiveness of the sector.
Objectives/Scope of the report
The Indian consumer durables segment can broadly be segregated into
consumer electronics (TVs, Set Top Boxes and Audio systems etc.) andconsumer appliances (also known as white goods) like Refrigerators, Washing
Machines, Air Conditioners, Microwave Ovens and Vacuum Cleaners.

4

The study is carried out with the following major objectives: Understand the demand driver of Consumer electronics in India Market size and domestic production trends of some major products inthe category Impact of WTO, FTA and government policies on the electronics
manufacturing ecosystem in India
 Conclusions and recommendations based on the study

Consumer Electronics market in India
Overview
Indian Consumer Electronics market has been witnessing sustained double
digit growth rate in the past few years. Increasing product awareness,affordable pricing, innovative products and the high disposable incomes haveaided in the strong growth in the consumer electronics market in India. Rapidly
shrinking replacement cycle for consumer durables is observed as sustaining
demand in urban India. The existing low penetration rates and the increasing
usage of consumer durables have catapulted rural India to the high demand
generating segment. The consumer electronics market in India is characterized
by technological advancements, innovative product introductions, pricefluctuations and intense competition.
Penetration levels– CTV’s (Color televisions)Indian television market is highly under penetrated compared to China,developed countries and world average.

5Penetration level of Television sets per 1000 population
1000
900
800
700
600
500
400
300
200
100
0

856

865
772

751
678

676

World average = 538
467

179

USA

RussiaChina

EuropeGermany

BrazilMexicoIndia(Source: Economic intelligence unit, 2013)
Figure 1: Comparison of TV penetration

Market sizes and growth rates– CTV’s
Television market in India is expected to grow at a robust rate of 19% CAGR till
2016.
Market size of TV in India (in INR Billion)

800

19.1% 618

600

12.8%
400
211

241

257

2007

2008

2009

297

329

380

2011

2012

435

514

2013

2014E

735

200
0
2010

(Source: FICCI)
Figure 2: Market size of TV in India

2015E

2016E

– Set top boxes
The set-top box (STB) market is growing rapidly, due to the expansion of DTH
and introduction of digitalisation of Cable TV networks in metros & tier II cities.
The DTH market was worth USD 2.2 billion in FY13; the subscriber basereached 51 million from 23 million during 2010-13, subscriber base is expected
to reach 200 million by 2018, thereby making India one of the world’s largest
DTH markets. Evaluating the present market scenario, around 80% of the total
cable TV subscribers are still on analog based networks, which is expected tobe covered under the 3rd and 4th phase of digitalization.
6

The Indian STB manufacturers are facing a disadvantage due to anomaly inthe tax structure. The disadvantage is arising out of the business model
practiced by Direct-To-Home (DTH) and Main Service Operators (MSO).
Operators, who provide content to subscribers through a Set Top Box, pay
Service Tax only on the content provided and not on the Set-Top Box which is
packaged as activation charge, with tax being charged on installation alone.
Since the STB is not being supplied against a charge or deposit, DTH and MSO
operators are not paying VAT and hence are unable to issue Form ‘C’. This
makes the landed cost of domestically manufactured products more
expensive versus imports, since Indian manufactures have to pay CST
equivalent to local VAT (which is 12.5%-14% without `C’ form). Indian
manufacturers are therefore unable to compete with imported equivalents.

Manufacturing of consumer electronics in India
Electronics production in India was valued at USD 34.8 billion in FY13.
Production expanded at a CAGR of 16.6 percent since FY06.

Electronics production (in USD billion)
60.0

55.7

17%
47.6

50.0
40.7
40.0

16.6%

30.0
20.0

29.7

34.8

25.4
17.6

20.3

23.1

2009

2010

13.8

10.0
0.0
2007

2008

2011

2012

2013

2014E

2015E

2016E

7

(Source: FICCI industry report, 2013)
Figure 3: Consumer electronics production in India

SWOT analysis of the Consumer electronics sector in India
Strengths
Presence

Weaknessesofestablished

urban

in

both

and

rural

Threats

In India, penetration
Demand is seasonal level of white goods

distribution
networks

Opportunities

and

high

during is lower as comparedfestive season.

to other developing

High import duties
on raw materials.

countries.

areas.

Cheap imports fromPresenceofknown brands.

well-

Demandisdependent on good
monsoons.

Unexploitedruralmarket.

ASEAN

at

0%

or

concessional import
Duty & imports from
China

Home appliances
Overview
Demand in urban markets is likely to increase for products such as LED TVs,
laptops, split ACs and, beauty and wellness products. In rural markets, durables
like refrigerators as well as other home appliances are likely to witness growing
demand in the coming years. The rural market has recently experienced
around 30 per cent growth rate in demand for electronics and home
appliances. Urban growth is likely to be driven by new technology/innovative
products, lifestyle products and replacement demand.
Penetration levels
Refrigerator has the highest penetration in India of 31%

8

Household penetration (in %)

40

31
30
20
10
10

5.3

6.8

Microwaves

Airconditioner0
Washing machine

Refrigerator(Source: Euromonitor India consumer appliance report, 2013)
Figure 4: Household penetration of home appliances– Air Conditioners

The Indian AC market accounted for sales of 3.6 million units in 2013. AC’s areperceived as high-end products; current penetration stands at 6.8 per centincluding Window and Split AC. The segment had a 13.0 per cent share (2013)
in the consumer appliances market. High income growth and rising demand for
split ACs are the key growth drivers. The room air-conditioning market
represents approximately 50% of the total market, with the other 50%
comprised of central and specialist air-conditioning systems. The room AC
market can again be divided into two sub-segments. On the one hand theresidential segment which now constitutes a majority 60% market share andon the other hand the commercial segment which represents a smaller 40%.
Household penetration of Air Conditioners
100%

89%

80%

72%
53%

60%

50%

40%
20%

8%

7%

Indonesia

India

0%
TaiwanSingapore

China

Korea

(Source: Capitaline analyst report, 2013)
Figure 5: Household penetration of air conditioners

9Market sizes and growth rates– Washing machines
Washing machines are the second largest contributor to the consumer
appliances market (after refrigerators); in FY 2013 total sales was around 7.5
million units. Fully automatic washing machines are garnering an increasing
share of the market due to reduction in prices and higher disposable incomes.
LG Electronics continued to be the leading player in home laundry appliancesin India with a share of 25% in 2013, followed closely by Samsung Electronics(23.2%). The major chunk of this growth is expected to be driven by newer
households purchasing washing machines, as well as a greater number ofhouseholds replacing their semi-automatic washing machines with fully
automatic washing machines. 6-9.9 Kg is the most popular category in India
with 72.2% share in the total sales.
Market size of Washing machines (in INR Billion)
160.0

17.1%

140.0

122.2

120.0

101.4

24.3%

100.0

87.4
73.1

80.0

58.5

60.0
40.0

140.3

23.6

29.4

36.9

47.3

20.0
0.0
2007

2008

2009

2010

2011

2012

2013

2014E

2015E

2016E

(Source: Euromonitor India consumer appliance report, 2013)
Figure 6: Market size of washing machines– Microwave ovens

Due to the convenience of mobility and ease of operation, freestanding
microwaves continue to dominate the Indian market in 2013, accounting foralmost all volume sales. LG Electronics continued to be the market leader in2013 with a volume share of 32%. Samsung Electronics ranked second with a
22% share followed by Whirlpool with just over 11% and Bajaj Electricals with
10%.
10

Market size of Microwave Ovens (in INR Billion)

30.0
21.0
18.1

20.0
15.0

21.5%

10.0
5.0

24.2

16.0%

25.0

4.8

5.8

7.0

2007

2008

2009

13.3
8.6

15.5

10.6

0.0
2010

2011

2012

2013

2014E

2015E

2016E

(Source: Euromonitor India consumer appliance report, 2013)
Figure 7: Market size of Microwaves in India– Refrigerators
Refrigerator sales stood at ~14.0 million units in 2013. This segment makes up
18.0 per cent of the consumer appliances market. The market share of directcool and frost free segment is 76.3 per cent and 23.7 per cent respectively. Key
growth drivers are lower prices and rising demand for frost-free refrigerators.
Fridges with a capacity range of 142-340 litres dominated fridge sales over thereview period, representing 74% of total volume sales. In fact, the 165-litre
fridge was the standard in almost all households until the arrival ofcompetition and the need to differentiate, coupled with economic
development, which led to the development of higher capacities. Over thereview period, fridges with 341-540-litre capacities continued to gain
momentum to account for 20% of total fridge volume sales in 2013. Market
share of LG is 24.50% and Samsung is 20.60% in 2013.

11

Market Size of Refrigerators (in INR Billion)
100.0

8.0%
87.3

90.0

80.8

80.0
70.0

17.4%

60.0

67.4

74.2

57.1

48.6

50.0

41.3

40.0
30.0

93.4

33.9
28.3

20.0
10.0
0.0
2007

2008

2009

2010

2011

2012

2013

2014E

2015E

2016E

(Source: Euromonitor India consumer appliance report, 2013)

Figure 8: Market size of Refrigerators in India

SWOT analysis of the Consumer home appliances sector in India
Strengths
In

recentWeaknesses

years, Poor

Opportunities

government Rapid urbanization

organized sector has spendingon

Threats
cheaperfromimports
China&increased its share in infrastructure.

Concessional

the market vis a vis

imports under FTA

the

from

unorganizedsector.

duty
ASEAN

Countries are forcing
threattolocal

manufacturing
Easy availability of Low
finance.

purchasing Increase in income Poor infrastructure;

power of consumers. levels, i.e. increase in Non-Availability
purchasing power of regularconsumers

of

power

supply, whichisimperativefor

consumerelectronics product12Impact of WTO and FTA’s
Electronic components which form the basis of any electronic products is low
volume, low weight, cheap and easy to transport across the globe. Moreover,under the Information Technology agreement-1 (ITA-1) of the world tradeorganization, which came into force in 1997, a large number of electronic
components and products are bound with zero tariffs making tradeunrestricted across international borders. Also, electronics manufacturing ischaracterized by high volume and low margins. All these factors have resulted
in the electronics hardware industry being globally integrated with few large
global players catering to a large part of the world demand.
In the current WTO regime, India is a party to the “Trade Related Aspects of
the Intellectual Properties (TRIPs) Agreement” and has accordingly, amended
most of its IPR Acts and Rules to conform to the said Agreement. The Indian
Copyright Act 1957 was amended in 1999; the patent Act 1970 was amended
in 1999 & 2003 and Trademarks and Merchandise Marks Act 1959 was
overtaken by a new Trademark Act 1999. The Industrial Design Act 1911 was
effectively replaced by The Design Act 2000, and the Layout Design of
Semiconductor integrated Circuit Act 2000 was enacted.
WTO regime resulted in zero customs duty on imports of all telecom andelectronic equipments. 217 IT/electronic items were covered under the
Information Technology Agreement (ITA) of the WTO for complete customs
tariff elimination by 2005. Out of these 217 items, several items were alreadyat NIL customs duty. In fact, IT/electronics was the first sector in India to facecomplete customs tariff elimination. The ITA-1 has resulted in intensifying
competition as more imported products are easily available at lower prices.

13Free Trade Agreements (FTAs) with the ASEAN Countries
According to statistics by the Asian Development Bank, currently India tops thelist of ASEAN countries with 30 FTAs, followed by Singapore with 26, China andKorea with 22 each, and Japan (19). The total number of FTAs that Asian
countries have entered into is 134. Out of India’s 30 FTAs, eight are with the
integrating Asian region, while 22 are outside of Asia.
Problems with the current structure
Domestic demand of electronics in India is expected to reach USD 400 Billion
by 2020. At the current rate of growth domestic production can cater to ademand of USD 100 Billion in 2020 as against a demand of 400 Billion USD andthe rest would need to be met by imports. This aggregates to a demand supply
gap of USD 300 Billion by 2020. Unless the situation is corrected, it is likelythat by 2020, the electronics import may far exceed oil imports. There is aneed to transform India into a global hub for electronic system design andmanufacturing (ESDM) so as to meet the growing domestic and global demand.
There are many challenges to advance the same - infrastructure gap, tax
structure, supply chain and logistics, inflexible labor laws, limited R&D focus, inadequate funding and limited value addition
2000

2010

2017
(FTA with ASEAN)

Mobile Phone

0%

0%

PC

0%

0%

CRT

10%

0%

10%

4%, 0% with

LCD/LED TVs

16%-30%Thailand
AC

10%

7%

Washing machine

10%

7%

Refrigerator

10%

2.5%

High Duty(Source: Arthur D. Little analysis)

Figure 9: The customs duties reduction due to FTA’s
14

Heavy taxation in the country is one of the challenges for the players. At its
present structure the total tax incidence in India even now stands at around25-30 per cent, whereas the corresponding tariffs in other Asian countries are
between 7 and 17 per cent
The local manufacturing benefitsof all the major consumer
appliances in expected todecrease by 2017 when the
FTA’s with the ASEAN countries
are fully implemented(Source: Arthur D. Little analysis)

Figure 10: Manufacturing Competitiveness of Consumer appliances in India(Source: Arthur D. Little analysis)

Figure 11: Import of key components for TV manufacturing in India
15

Impact of 2013 Budget:
The Budget had no specific proposal pertaining to the household applianceindustry. A tax credit of Rs 2,000 for a person with income up to Rs 5 lakh per
annum, introduced in the Union Budget 2013-14, will result in higher
disposable income in the hands of people coming in the lowest tax bracket.
But, this is unlikely to translate into any meaningful impact on the demand.
Customs duty on set top boxes in 2013 budget was increased from 5% to 10%
to encourage local manufacturing. Given the deadline for full digitalization by
2014, this move also has not benefited the industry much and resulted only inincrease in cost of the STB for end user.

Conclusions and recommendations
Possible solutions
1. There is a need to have a relook at FTAs with Thailand/ASEAN as far as
Consumer Electronics & Home Appliances sector is concerned. As an
immediate measure Product Specific Rules should be made applicablefor consumer appliances sector products. Critical inputs such as Open
Cell for LED TVs should be made in the country of Origin.
2. Due to implementation of FTAs, CE&HA sector is facing inverted duty
structure, where the final product is being imported at 0/concessional
import duty, whereas inputs attract 10/7.5% duty. We recommendthat import duty on inputs, which are not made in the country, bebrought down to 0%. It will boost indigenous manufacturing.
3. Since there is very high degree of Electronics involved in Home
Appliances and also since the imports of these products is resulting in16

heavy outflow of foreign exchange and as it is an employment
intensive sector, Home Appliances should be treated as Electronic
Products & extended benefits of MSIPS, EMCs etc.
4. Treat Set Top Box in the same category as telecommunication network
equipment and thereby allow MSOs/DTH Operators to issue form ‘C’even without reselling the product. With this step at least half of thedemand of 100 million Set Top Boxes will be met through domestic
manufacturers in next 2 years, potentially generating employment tomore than 5000 people. Alternatively the import duty on Set Top
Boxes is raised to 15% to provide level playing field to indigenous
manufacturers.
5. Presently the Inputs for the Consumer Electronics & Home Appliances
sector are not available through indigenous sources and have to beimported. This is a big handicap and adds to the cost of manufacturing
final product. Greater emphasis should be laid by Govt. to encouragecomponent Industry. If the inputs are available, at competitive priceindigenously, it will help in growth of CE&HA industry. It will also resultin greater value addition within the country, building the right eco
system for the country and creating huge employment opportunities.

Recommendations for sustainable growth
Infrastructure development
Lack of adequate physical infrastructure such as roads, ports, airports,
electricity etc., are adversely affecting the competitiveness and productivity ofthe domestic home appliances industry in India. Uninterrupted power supply isa necessary condition for operation manufacturing units as power fluctuations
can lead to major losses to the manufacturing processes. Moreover, thedemand of home appliances such as Air Conditioners, Refrigerators, Washing17

Machines, Microwave Ovens and Vacuum Cleaners are driven by theelectrification of homes and uninterrupted supply of electricity in the alreadyelectrified areas. Indigenous manufacturing in the entire value chain of ESDM
is needed for economic development. Attractive fiscal incentives across thevalue chain of the ESDM sector through a modified special incentive package
scheme (M-SIPS) provided by government to eliminate the disability costs in
manufacturing on account of infrastructure gaps relating to power,transportation etc. is a step in right direction.
Incentives provided for setting up of 200 Electronic manufacturing clusters(EMC’s) with world class logistics and easy to do business facilities should help.
The benefits of National manufacturing policy and National investment andmanufacturing zones (NIMZ) are available to EMCs.
Raw Material, Components & Machinery
Weak supply chain network and lack of vendor support also affects the quality,
productivity and competitiveness of the sector. There should be hassle freeimport of raw material and components by streamlining the import policy andand through the simplification of procedures.
Skill Development and Training of Manpower
In the context of achieving the necessary ‘scale’ and ‘speed’, the following
solutions could be the way ahead in providing a conducive environment for
India to meet its skill development goals:
 Targeting skill development at all levels of the ‘skill pyramid’ Implementing Vocational Education in schools Creating a large talent pool through Modular Employable Skills

18

To significantly enhance the availability of skilled manpower in the ESDM
sector, a special focus for augmenting post-graduation is required
Encouragement should be given for setting up of skill oriented courses andtraining programs along with hands on laboratories enabling graduates fromother disciplines to mitigate to EDSM.
R&D and Technology Up gradation
Indian manufacturers are not able to compete with global majors due to thehigh level of technological knowhow and R&D content required forindigenous manufacturing. Technology transfer, R&D and IPR creation should
be incentivized by government through friendly tax regime. A vibrant andsustainable ecosystem of R&D, design and engineering and innovation isrequired to enhance manufacturing capabilities of electronic raw materials,
components, sub-assemblies as well as products.
Productivity Enhancement for Raising Profit Margins
To tackle the factors hindering the productivity and competitiveness of thesector, a number of strategic initiatives need to be taken up by Industry
Associations, manufacturers and Government. In order to becomecompetitive in the domestic as well as world market, consumer appliancemanufacturing units need to formulate strategies based on market
intelligence, product development, R&D, demand forecasting and competitive
pricing productivity estimations based on Labour and Total Factor Productivity
Growth rates have been found quite low in the light electrical sector
particularly home appliances segments, there is a need for substantial up
gradation of skill levels and technological knowhow (R&D activities) in this
sector for further value addition at the domestic level.
Contract manufacturing
Labour policies in India are not favourable for manufacturing as compared toother competing countries such as China. Therefore, there is requirement offlexible labour policies to enable manufacturers to restructure labour force in
response to the market demand.
19

Disclaimer
This report has been prepared by Arthur D. Little in collaboration with
CEAMA. Our research, analysis and conclusions are based on publicly
available sources, databases and sectorial reports. The report may not be
reproduced without our prior written approval.
Any use which a third party may make of this document, or any reliance onit, or decisions made or not made based on it, are the responsibility of suchthird parties. CEAMA and Arthur D. Little accepts no duty of care or liabilityof any kind whatsoever to any such third party, and no responsibility fordamages, if any, suffered by any third party as a result of decisions made or
not made, or actions taken or not taken, based on this document. CEAMA
and Arthur D. Little accept no liability for the facts and figures andconclusions in this report.

20

About Arthur D. Little
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21About The Authors
Rohit Singh – Deputy Manager, CEAMA
Rohit is a Deputy Manager with CEAMA. He has more than 4
years of experience in Marketing & Planning. His industry
focus areas are Consumer Electronics & Home Appliances,Power & Renewable Energy and InfrastructureShaun Lobo – Manager, Arthur D. Little
Shaun is a Manager with Arthur D. Little, India. He has over 6
years of experience in management consulting. He regularly
assists a wide range of clients to realise their growth aspirations
and has worked with numerous Indian and global
conglomerates. His industry focus areas are Telecom,
Electronics, Real Estate and Energy. He is part of the global S&O
practice.

Kushal Karwa – Consultant, Arthur D. Little
Kushal is a Consultant with Arthur D. Little, India. He has morethan 3 years of work experience in consulting. He is an MBAfrom IIM Ahmedabad. His industry focus areas are Automobile,
Telecom, Electronics and FMCG.

Contacts:
Dr. Srini Srinivasan
Managing Director
Arthur D. Little India Pvt. Ltd.
Business Centre, Radisson Blu
Suites B-Block, Sushant Lok,
Phase-1
Gurgaon -122002, Haryana
Email: srinivasan.srini@adlittle.com

Web: www.adlittle.com

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