A sketch of durables sales in India.

The two biggest product categories of India's durables markets posted declining sales for the first half 2005. Both color TVs and refrigerators had lower volume and revenue.

The Hindu Business Line (Chennai), citing industry sources, said that the main reason for the decline was the introduction of a value added tax (VAT) in April 2005.

Color TV volume declined 0.4 percent in the period from January 2005 through June 2005 with revenue declining 6.4 percent. In the April 2005 through June 2005 period the decline was even more pronounced. Volume was down 5.3 percent and revenue was down 14.6 percent.

Hardest hit was the conventional CRT color TV segment. Volume sales of these sets dropped 19.8 percent in the first half 2005, and 22.4 percent in the April 2005 through June 2005 period. The Hindu Business Line sourced the international research firm ORG-GFK for these data.

The results for the flat TV category (LCD, plasma) were markedly different.

Flat TVs account for 40 percent of TV sales. Flat TV sales soared 78.3 percent in volume, and 50.6 percent in revenue for the first half 2005. From April 2005 through June 2005 volume increased 36.2 percent and revenue rose 25.8 percent.

Sales of refrigerators reflected the pattern of perceived value supporting sales while lower price points using less effective technology declined.

During the first half 2005 frost free refrigerator sales volume increased 53.9 percent and the older, direct cool refrigerators declined in volume 14.9 percent.

Overall, the refrigerator category declined 4.3 percent in volume and 2 percent in revenue. Many analysts look at refrigerator sales as a prime indicator of the health of a consumer market. By this measure, India is slowing, but not by much.

Durables manufacturers and distributors are looking for a better second half 2005. The second half of a year is festival season in India, typically a time when sales of durables increase.

Meanwhile, it has been raining in the country--good, soaking rains as they say, and farmers are beginning to prosper. This is very good news, indeed, for durables manufacturers in India because their core urban markets are becoming saturated, and the growing rural middle class will offer new opportunities.

A posting on the Website of The Economic Times said that many marketers are looking to the rural middle class for 60 percent of their sales next year, instead of the usual 30 percent to 40 percent.

CONSUMER MARKET INSIGHTS: