After almost three decades, India has elected a majority government that has much stronger numbers than in the recent past. This new term therefore comes with the heavy burden of bigger expectations on several fronts.
The country is grappling with a slowing economy, rising unemployment, dipping consumer goods sales, rural distress, and massive financial sector deficits that loom large. The hopes for resolving these will certainly be a balancing act for policy makers, with a hard mix of populist and strong reformative actions to ensure lasting impacts.
The specific sectors that affect the residential technologies industry positively are an increase in expendable income, a desire for more consumer goods, and an increase in new home construction. The common consensus within the expert community is that achieving the above will require:
- Some muscle flexing with China to prevent dumping at a crucial time when China is seeking alternate markets to the USA, due to sanctions;
- Further adjustments to the last major economic reform: GST, which will simplify the overall taxation process and allow refunds to proceed smoothly, subsequently releasing working capital;
- Reforms and recapitalization of the banking and finance industry to promote consumer goods lending as well as industrial credit offtake [EDITOR’S NOTE: Find the definition of offtake here], thereby increasing overall consumption;
- Awaiting the benefits of tax reforms given to the housing industry to kick in and then provide easier finance terms for developers; and
- A greater push behind the “Make in India” campaign (an initiative launched in 2014 to make India a global manufacturing hub) with a focus on easing business conditions for foreign entities and a huge Infrastructure push to increase expendable incomes directly and indirectly. (Legal reforms would also help here – there’s a backlog of business-related cases in the courts which is slowing development.)
On the positive side, we already see a greater supply of stable electricity and a dramatically improving logistical air and road access program to Tier-2 (populations of 50,000 to 99,999) and Tier-3 (20,000 to 49,999) cities. This already has and is continuing to expand the market space in India, creating plenty of work for the residential technologies industry in coming years. Aditya Gupta is with the integration firm CCIIPL in Mumbai.