India white goods production seen up 15 pct in FY09

NEW DELHI (Reuters) - Production of white goods, or household appliances, is likely to grow 15 percent in the current financial year as consumer demand rises with manufacturers cutting prices on increased competition, an industry body said.

This will help the white goods segment achieve a production of 270 billion rupees in the year ending March 2009 compared with 235 billion rupees an year ago, the Associated Chambers of Commerce and Industry (ASSOCHAM) said in a release on Friday.

India saw its annual industrial output rising more than expected in July to 7.1 percent from a year earlier, which analysts said signalled continuing investment and underlying economic strength in the face of higher interest rates.

India's growing middle-class and rising incomes have attracted multi-national corporations in white goods, which has intensified competition leading to price cuts despite rising input costs, ASSOCHAM said.

Colour television prices are likely to fall by at least 15 percent in the current financial year as festival season approaches.

Prices of colour television sets fell by 10-12 percent in 2007/08, it said. The digital video disc, which has seen a sharp decline in prices, will see a further drop as competition intensifies, the industry body said.

Easily available loans, monthly instalment and exchange schemes, new models will further compel price-sensitive consumers to make purchases, boosting sales, it said.

"Demand for consumer durables has increased with rising income levels, double-income families, changing lifestyles, availability of credit, increasing consumer awareness and new models," ASSOCHAM President Sajjan Jindal said.

Apart from discounts, the demand for household goods is likely to surge as the Indian government has decided to raise wages of 5 million government employees at an estimated cost of $5.2 billion this financial year.