India's Festive Season Production Accelerates Up to 30% Amidst Optimistic Demand

Kolkata: Consumer goods makers are accelerating festive season production by up to 30% compared to last year, optimistic that demand momentum will sustain despite concerns over weather conditions in rural India.

Leading electronics contract manufacturers such as Dixon Technologies and PG Electroplast highlighted a "high" double-digit increase in orders across categories including televisions, lighting products, washing machines, and refrigerators. PG Electroplast, which supplies to brands such as LG, Midea, Voltas, Whirlpool, and Daikin, said its festive order book has grown by 40% over last year. Dixon counts Samsung, Xiaomi, Haier, and Philips among its customers.

Consumer electronics brands such as LG Electronics, Godrej Appliances, Haier, and BSH Home Appliances said their factories are operating at full capacity, with additional shifts to meet demand. BSH, which sells products under the Bosch and Siemens brands, has scaled up festive production by up to 60% year-on-year.

The festive season starts with Onam in Kerala and Ganesh Chaturthi in Maharashtra, with the core season from Navratri in October till Diwali in November.

Biggest Sales Period

The season is considered as India's biggest consumption period, accounting for as much as 30% of annual sales across several categories.

Retailers such as Lifestyle International and V-Mart Retail are also building festive season inventory at a double-digit pace. Reliance Retail, the country's largest retailer, has started stocking up for the coming Independence Day sales in August, which traditionally kicks off the festive shopping season every year, with inventory levels up by double digits.

"Retail sales are happening, indicating an improvement in consumption," said Atul Lall, managing director at Dixon Technologies, India's largest homegrown contract manufacturer. "Brands are very optimistic about the festive season."

Easing of tensions in the Gulf has helped the rupee recover to about Rs 94 per dollar from about Rs 96 last month, while benchmark Brent crude retreated to $73.79 a barrel Friday, from an average of $99 in the first week of June and $109 in the three months through May.

Companies expect a stronger rupee and lower oil prices to ease inflationary pressures, helping companies reduce prices by the festive season, further spurring consumer demand.

"We can't ask for better days for the festive season as it is now," said Satish NS, chief executive officer at Haier India. "Commodity prices and supply bottlenecks will ease with the war getting over. While demand in the mid-to-premium end will remain strong, if El Nino concerns are mitigated, then even the rural market and entry level will pick up."

Consumption has remained steady since February, improving further in the June quarter, said Devarajan Iyer, CEO at departmental store chain Lifestyle International. "So, there is no reason not to be bullish about the festive season. From November onwards, there is also the wedding season."