The consumer durables sector has faced challenges in recent months due to softened urban demand, inflation, and liquidity issues, weighing on corporate earnings. Ahead of the Union Budget 2025-26, companies are hopeful for tax relief, including higher exemptions or deductions, alongside measures to boost consumption and job creation, such as import duty cuts and expanded production-linked incentive (PLI) schemes. Industry expects the PLI scheme to broaden, fostering local manufacturing, attracting investments, and generating employment, with a focus on high-growth segments like home appliances and personal electronics. These efforts aim to reduce import dependency and strengthen exports while driving demand in the sector.
The Economic Survey 2025 notes that the domestic production of electronic goods has increased substantially from Rs 1.90 lakh crore in FY15 to Rs 9.52 lakh crore in FY24, growing at a CAGR of 17.5 per cent. It observes, programmes such as Make in India and Digital India, along with improved infrastructure, ease of doing business, and various incentives, have boosted domestic manufacturing and drawn foreign investments.
The survey also states that consumer-focused sectors like automobiles, electronics, and pharmaceuticals have emerged as growth drivers. The Economic Survey optimistically observes that with 2.8 per cent of the global share in manufacturing and with increasing shift of manufacturing production towards emerging economies like India and China; India stands a good chance of benefiting from trends in global industrial diversification.
Budget Expectations:
Focus on Energy-Efficient Appliances: With clean energy at the forefront of economic landscape, Energy-efficient appliances need strong policy support. India faces higher demand for air conditioners and cooling appliances is on the rise given the sustained rise in temperatures.
Self-Reliant Semiconductor Ecosystem: A robust semiconductor ecosystem can rationalize domestic supply chains and reduce costs.
Boosting R&D and Infrastructure: With India’s electronics market poised to reach $300 billion by 2026, the push for R&D and infrastructure development is strongly needed. Strategic investments in R&D are essential to spur innovation, enabling the development of advanced solutions that cater to evolving consumer needs.
Digital Payments and Smart Wearable market: Increasing government support for digital payment initiatives will trigger entry of new products in smart wearable market. This will also accelerate the shift to a digital-first economy.
Outlook:
The upcoming Union Budget is a key opportunity to revive the consumer durables sector hit by weak demand, inflation, and liquidity issues. Key expectations include import reductions, an expanded PLI scheme, and tax relief to boost local manufacturing, exports, and consumption. Industry leaders stress the need for subsidies, R&D investment, and semiconductor ecosystem development to enhance competitiveness. Support for energy-efficient appliances and digital payments could drive sustainable growth. Measured initiatives to boost private consumption expenditure could catalyse consumer spending. Additionally, direct tax incentives could reinvigorate demand for discretionary consumer goods. Higher spending on infrastructure could also spur consumption.