The changing market for different industrial products and particularly for consumer durables owes to a number of social and economic changes. But the most fundamental change relates to the growing clout of the Indian middle class, however defined, on the shape and size of market for products. This is because the post-1991 reforms have marked a distinct change in the lifestyles of the Indian people. There is no doubt that more and more people are becoming richer than they were in 1990-91. This inegalitarian income pattern has given rise to a skewed demand structure. The rising middle class has served to accentuate it. Technology and competition have brought out new products to the doorstep of middle classes. The rise of mass communications and IT has made access to information a lot quicker and easier for the consuming classes. For sellers, it has meant more competition and better monitoring of price, quality and cost. Growing competition from imported goods also means domestic producers have to innovate constantly to stay in competition.
This is seen more acutely in the consumer durables sector. During greater part of the 1990s, consumer durables have shown an erratic growth pattern. During 1994-95 and 1995-96, IIP for consumer durables grew 12 per cent plus. By 1998-99, the growth rate was down to 2.2 per cent. In 2001-02, the growth rate was six per cent.
Interestingly, during 1990-91 to 2000-01, washing machine was the fastest growing manufactured product. It is significant that washing machines have continued their upward growth even during the current year.
During April-June 2002, apart from washing machines, refrigerators, airconditioners, water coolers, VCRs, VCDs, DVDs etc maintained a growth rate of 10-25 per cent. It is significant that washing was almost non-existent at the beginning of the nineties.
Yet products differ in terms of size and growth. The market measured in terms of growth of total sales for washing machines has grown from around Rs 145 crore in 1990-91 to around Rs 1,800 crore in 2000-01 or by 113 per cent. During the same period, other products such as computers and peripherals 27.9 per cent, ethylene glycol 28.8 per cent, printing inks 25.8 per cent, PVC 24.7 per cent, polyester films 25.3 per cent, packaging goods 27.7 per cent, opthalmic glass and contact lenses 29.6 per cent, airconditioning equipment 22.9 per cent, energy meters 24.4 per cent, multi-utility vehicles 24.7 per cent, passenger cars 23.1 per cent, motorcycles 23.4 per cent and three wheelers 24.6 per cent have clocked impressive growth rates.
The growth of auto sector has also propelled the growth of components such as carburettors 24.7 per cent, shock absorbers 22.7 per cent, steering gears 22.9 per cent, gaskets 20.7 per cent, piston rings 22 per cent, and brake linings 20 per cent. The rise of electronics has pushed growth of television picture tubes at 20.3 per cent.
Other products with an impressive growth include process control equipment 22 per cent, medical equipment 20.4 per cent, copper and copper products 20 per cent, sponge iron 21.1 per cent, floor and wall tiles 20.9 per cent, sanitarywares and fittings 21.5 per cent, rubber contraceptives 20.5 per cent, cycle tyres 17.9 per cent and cycle tubes 21 per cent and plastic tanks and containers etc 20.3 per cent.
It is clear that most of these products have grown on the back of a strong demand from the growing Indian middle class that has benefited from the liberal reforms and the resultant competition that has ensured better return on their spending as well as widened choices. There are products that have either contracted or registered niggardly growth in total sales in the 1990-91 to 2000-01 period. These include non-filament yarn -1.1 per cent, steel pipes and tubes -100 per cent, cranes -2.8 per cent, or scooters 6.1 per cent, electric fans 5.3 per cent, watches 9.1 per cent, medium and heavy vehicles 6.7 per cent, textile machinery 4.3 per cent, elastomers (synthetic rubbers) 2.5 per cent, phosphetic fertilisers 3.1 per cent, and vanaspati six per cent. What has foreign competition meant for the Indian industrial sector and market for different commodities The share of imports in total consumption for 2000-01 gives some idea. Vegetable oils 23 per cent, nylon filament yarn 11.9 per cent, nylon tyre yarn and fabrics 25.8 per cent, particle board 18.8 per cent, newsprint 47.2 per cent, methanol 24.8 per cent, phenol 38.9 per cent, elastomers (synthetic rubbers) 72.4 per cent, lube oil and lubricants 29.3 per cent, opthalmic glass and contact lenses 43.4 per cent, alloy steels 52.1 per cent, seamless pipes and tubes 26.5 per cent, pumps 40 per cent, gears 37. 9 per cent, cranes 46.6 per cent, textile machinery 56.2 per cent, printing machinery 53.3 per cent, switchgear 24 per cent, medical equipment 80.8 per cent, transmission equipment 49.7 per cent, gaskets 33. 6 per cent, and crankshafts 31.5 per cent. The Indian industry has to gear up to strength its presence in these products.
While rising urbanisation, two member earning families and the need for freedom from the monotony of routine work have kicked off a sprawling growth in sales of washing machines, growing demand for textiles and a host of consumer durables has kicked off growth of packaging and polyester goods.
Trendy textiles have generated acute competition among players in the textile industry. The Indian urban classes under the influence of snazzy global brands in textiles have become more and more fastidious in the choice.
There is a fear that the recent decline of industry and, particularly manufacturing sector points to the eventual deindustrialisation becoming a reality.
The United Nations Industrial Development Report for 2002-03 has underlined this fear. Quite simply, the Indian industry has not taken up challenges of innovations, R&D, technological upgradation, competitive compulsions relating to price, quality and cost and, of course, export promotion as seriously as most emerging markets including China have done.
The Indian industry must wake up to global compulsions if it has to survive and grow in the future being increasingly marked by internecine competition among countries.