India Market Watch: Consumer Durables to Cost More in 2017 and 20% Indian Migrants UAE Bound as per OECD Report

January 9, 2017 Posted by India Briefing Reading Time: 5 minutes

Consumer Durables to Cost More in 2017 Due to Demonetization

The demonetization of high denomination currency slowed down growth in the consumer durables sector, particularly in small towns and rural regions in the past two months. Analysts also expect a decline in the net income of automobile, consumer products, real estate, and telecom sectors. In terms of the regional impact of demonetization on the consumer durables sector, south India appears to be the least affected when compared to the north and eastern parts of the country due to a stronger adoption of digital payments mechanisms.

While the months following the Diwali season are identified as lean season for sales, the trend towards conservative spending was exacerbated this time as consumers felt the immediate cash crunch. This was highlighted by the 37-38 percent slump in overall sales in November last year, which picked up in December but still exhibited a de-growth of about 7-10 percent. Even though growth has picked up in metros and Tier-II cities, given that the consumer durables industry depends on upcountry regions for up to 35 percent of its sales, a demand revival in the rural areas and towns remains critical.

The slowdown will additionally have price implications for consumer durables as the industry will be keen to make up for losses incurred. In fact, the sector will need to register growth of more than 20 percent in its January-March quarter to close the current fiscal year on a positive note.

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Chinese Manufactures Dominate India’s Smartphone Market

Chinese brands seized their biggest slice ever of the fast-growing US$10 billion Indian smartphone market in 2016, accounting for more than one in every two phones sold in the latter part of the year. Brands like Oppo, Lenovo, OnePlus, Gionee, and Xiaomi not only ate into the sales of market leader Samsung, but were responsible for more than 50 percent of smartphone sales in India as compared to 19 percent just a year ago. Moreover, in the ultra-competitive US$120 – US$440 mid-market smartphone segment, Chinese vendors more than doubled their market share to 68 percent, according to Counterpoint Technology Market Research.

Low cost, improved technology, and savvy advertising have satiated Indian consumer appetites. A blitz of celebrity endorsements by Bollywood and cricket stars has further embellished highly positive perceptions for certain phone brands like Oppo and Gionee, explaining their sudden popularity.

What has in fact favored Chinese vendors is that these manufacturers concentrate on low-cost markets like China, India, and Indonesia. More importantly, they enjoy easy access to low cost components and possess expertise in designing metal casing for cheap phones, allowing them to capture so much market share in such a short span of time. Cumulatively, these factors have provided them with an absolute edge over global market leaders Samsung and Apple as well as homegrown companies like Micromax, Lava, and Karbonn.

RELATED: India Market Watch: Demonetization Boosts Digital Payments Sector

OECD Report Says 20% of Indian Migrants Reside in the UAE

‘India to the UAE’ formed the second largest migration corridor in 2015, according to a recent report released by the Organisation for Economic Cooperation and Development (OECD). The total number of migrants from India to the UAE between 1995 and 2015 stood at 2.8 million – making the UAE the top destination country for Indian migrants – up from fourth place two decades ago. The Indian migrant population in the UAE grew by 126 percent between 2005 and 2010, and accounted for nearly 20 percent of the Indian diaspora in 2015.

New workers to the UAE were heavily recruited to the health sector (68,000), followed by the financial sector (57,000), and the education sector (79,000) – recording an employment increase of about 18 percent, 13 percent, and 7 percent, respectively. Overall, construction, trade, and industry sectors were the top three sectors with the highest employment rates in the UAE labor market.

Consequently, responding to its large foreign population, the UAE’s Federal National Council (FNC) is currently debating various issues. These include conducting background security checks on foreign workers and decreasing the number of unskilled workers in the construction sector. The UAE’s government cabinet recently directed relevant agencies to develop a general construction index listing the technical criteria that will ensure productivity while decreasing the number of unskilled foreign workers. The move would also imply the enforcement of laws that assist contracting companies in using advanced technology.

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