An EMIS Insights Industry Report

India Consumer Electronics

H1 FY2024 Half-Annual
Update

India Consumer Electronics H1 FY2024

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 Introduction

India's consumer electronics industry is experiencing far better domestic demand conditions than in
previous years. Consumer electronics sales in southern India during the Onam season, which ended in
August 2023, were robust, implying that similarly improved consumer confidence will be observed in the
rest of the country during the upcoming festive season. Furthermore, as of September 30, 2023, India's 5G
rollout was one of the most extensive in the world, with 5G coverage available in approximately 10,000
towns and cities across the country. The widespread availability of 5G coverage may provide impetus for
developing new applications, potentially opening up new avenues for the consumer electronics industry.
Finally, the government launched its Right to Repair portal in H1 FY2024, offering consumers affordable
electronic device repair options as an alternative to purchasing new consumer electronic devices.

India’s 5G Rollout Has Been One of the Fastest Telecom Network Rollouts in History

In October 2022, the Indian government launched 5G services. Since then, India's 5G network roll-out has
been one of the fastest in history. India is now one of the top three countries in the world in terms of 5G
installed base, with download speeds that rival those found in many advanced markets. According to the
Ericsson Mobility Report, India had the highest net additions of mobile subscriptions in the June 2023
quarter, at +7mn subscribers, indicating that 5G services are being adopted aggressively. Furthermore, 5G
coverage is nearly ubiquitous in India. Reliance Jio and Bharti Airtel, the two 5G service providers, cover
about 10,000 cities and towns and aim to cover the entire country by December 2023 or March 2024. In
FY2024, the two network operators may invest an additional INR 750 billion in network strengthening,
implying expanded coverage.

The widespread availability of 5G connectivity in India could significantly affect the consumer electronics
industry. The general use of 5G could pave the way for the widespread adoption of the Internet of Things,
which involves connecting multiple electronic devices to the Internet, such as smart refrigerators, wearable
electronics, and industrial sensors. 5G coverage, with its high-speed data transfer capabilities and low
latency, may also enable the development of novel applications, driving demand for more advanced
consumer electronic devices.

The Indian Government Commits to Right to Repair

In May 2023, the Ministry of Consumer Affairs (MCA) established a Right to Repair portal, bolstering
consumers' rights over electronic devices. Right to Repair provides consumers with affordable repair of
mobile phones and other electronic devices by original equipment manufacturers (OEMs) or third-party
repairers, intending to offer consumers an alternative to purchasing new products entirely. The
government's Right to Repair framework will initially focus on farming equipment, mobile phones and
tablets, consumer durables, automobiles, and automobile equipment. The Right to Repair framework was
created per Prime Minister Narendra Modi's Lifestyle for Environment (LiFE) initiative, which encourages
mindful consumption, adopting circular economy practices, and an environmentally conscious lifestyle.
There were 17 brands registered on the Right to Repair portal as of May 2023, including Apple, Samsung,
Realme, Oppo, HP, Panasonic, and LG, among others.

India Consumer Electronics H1 FY2024

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 The LiFE initiative and Right to Repair were launched against rising electronic waste in India, reaching
1.6mn tonnes in FY2022, with only 33% of this waste collected, dismantled, or recycled. Right to Repair
aims to promote repair as an alternative to excessive device replacement, thereby reducing e-waste
generation. Furthermore, the government stated that the Right to Repair would keep manufacturers from
engaging in anti-competitive practices by preventing third-party repairs, limiting the information they share
about the product, and controlling who repairs their products. As a result, companies participating in the
Right to Repair programme must share repair information and manuals and make diagnostic tools and
service parts more readily available to consumers and third-party repairers.

Improving Consumer Electronics Demand Prospects

Consumer electronics firms have been stockpiling inventory since the end of the previous fiscal year in
anticipation of improved demand sentiment. In H1 FY2024, evidence grew that the long-awaited increase
in consumer spending on electronic devices is on the way. Consumer electronics sales were robust during
the Onam festive season in southern India, which fell at the end of August 2023, boosting sentiment
among consumer electronics industry players. Consumer electronics companies currently forecast 18-20%
y/y value growth in sales during the October 2023 festive season, which coincides with the ICC Men's
Cricket World Cup. Thus, industry participants anticipate an increase in television sales, particularly with
larger screen sizes, as well as audio products such as battery-powered party speakers, soundbars, wireless
headphones, and earbuds. Meanwhile, brands and contract manufacturers reached their maximum
holiday production capacity by early September, with unsold inventory levels for smartphones, televisions,
refrigerators, and washing machines returning to normalcy.

The increase in consumer electronics demand will benefit many product categories. Consumers have
learned from their pandemic experience, according to Voltas Ltd, an India-based multinational home
appliance manufacturer, raising demand for products with advanced health and hygiene features, such as
air conditioners with HEPA filter technology and home appliances with advanced fresh-tech features. With
India's return to pre-pandemic norms, the surge in demand will most likely affect all sales channels, with
offline retail making a strong comeback after the pandemic.

M&A Deals in H1 FY2024

Target Country of Deal Value,

Date Deal Type Buyer Stake, %
Company Buyer USD mn

Retail investor(s);
Anchor investors;
Rishabh Non-Institutional
59.15
11-Sep-23 Instruments IPO investors; India 23.00%
(Official)
Ltd Qualified
Institutional
Buyers (QIBs)

India Consumer Electronics H1 FY2024

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 PG Qualified
60.10
2-Sep-23 Electroplast SPO Institutional India 15.00%
(Official)
Ltd Buyers (QIBs)

Source: EMIS DealWatch

M&A Deals Commentary

On September 11th, 2023, Rishabh Instruments Ltd, an India-based multinational producer of test and
measuring instruments and industrial control products for the broader electronics sector, debuted on the
Bombay Stock Exchange and the National Stock Exchange. Rishabh Instruments' stock opened at INR 460
per share, a 4% premium to the issue price of INR 441. With a 72.5x oversubscription rate among QIBs, the
IPO was heavily oversubscribed by institutional buyers. Rishabh Instruments will use the proceeds from
the IPO to expand its Nashik Manufacturing Facility I and for other general corporate purposes.

On September 2nd, 2023, PG Electroplast Ltd, a leading provider of electronics manufacturing services
such as original design manufacturing (ODM) and original equipment manufacturing (OEM) for the
consumer durables, consumer electronics, and automotive industries, raised an additional INR 5bn in
proceeds through a qualified institutional placement. The placement resulted in an implied dilution of
approximately 14% of the company's outstanding equity. The funds will be used for capex investments and
working capital, according to PG Electroplast.

Sources

Business Standard
Business Today
Economic Times
ET Edge Insights
Forbes India
India Today
Mint
MoneyControl
The Atlantic Council
The Times of India

Glossary

LiFE Lifestyle for Environment

MCA Ministry of Consumer Affairs
ODM Original Design Manufacturing
OEM Original Equipment Manufacturing
QiB Qualified Institutional Buyer

India Consumer Electronics H1 FY2024

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India Consumer Electronics H1 FY2024
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