Tier II, III demand and energy norms to guide consumer electronics growth in 2026

The Indian appliances and consumer electronics sector is expected to emerge as the world’s fourth-largest market by FY27, with revenues projected to reach Rs 3 lakh crore by FY29. The growth is being driven by rising household incomes, increasing demand from aspirational rural regions, and easier access to consumer finance.

Looking ahead, 2026 is expected to see steady, quality-led growth as the industry prepares for stricter Bureau of Energy Efficiency (BEE) norms coming into effect from January 1. Companies are increasing investments in localisation, expanding manufacturing capacity, and introducing AI-enabled products to meet evolving consumer preferences.

Demand is increasingly being driven by Tier II and Tier III markets, while connected homes are becoming more mainstream. Industry executives said this places India’s consumer durables sector in a position to expand not only in scale but also in depth.

“India is expected to become the fourth-largest consumer durables market globally by FY27, with the industry projected to grow to Rs 3 lakh crore by FY29 at a CAGR of around 11 per cent,” said Sunil Vachani, Chairman, CII National Committee on Consumer Electronics & Durables.

Vachani added that growth is likely to be broad-based, supported by rural electrification, improving access to consumer finance, and steady income growth. However, he said continued dependence on imported components, particularly display panels and compressors, underlines the need to strengthen the domestic component ecosystem and increase value addition. Vachani is also Co-Founder and Executive Chairman of Dixon Technologies.

The year 2025 marked several milestones for the sector, including LG Electronics India’s record-breaking initial public offering, Haier’s strategic divestment, and Samsung Electronics India crossing Rs 1 lakh crore in sales. These developments highlighted the scale of the industry and rising investor confidence.

At the same time, 2025 was described as a year of mixed outcomes. Manish Sharma, Chair of the FICCI Electronics & White Goods Committee, said sales of cooling products such as air conditioners and refrigerators were impacted by weather-related volatility. He added that sales picked up significantly during the festive season following GST reforms that reduced duties on large appliances including air conditioners, televisions with screen sizes above 32 inches, and dishwashers.

Industry executives said the trend of consumers upgrading to higher-efficiency air conditioners, larger televisions, and smarter appliances, which began during the pandemic, continued through the year when value propositions around lifetime cost, service, and reliability were clear.

LG Electronics India’s IPO in 2025 was oversubscribed by over 54 times. By the end of the year, China’s Haier Group divested its 49 per cent stake in Haier Appliances India to Bharti Enterprises and Warburg Pincus in a deal estimated at USD 2 billion.

“2025 has been a defining year for LG Electronics as the company was listed and our customer response has been consistent through the year, despite challenges that impacted the overall industry,” said Sanjay Chitkara, Co-Chief Sales and Marketing Officer, LG Electronics India. He added that timely incentives, including GST reductions on products such as air conditioners and televisions, helped boost festive season sales.

Citing industry reports, Chitkara said average monthly spending on consumer durables rose 72 per cent in FY25, driven by increased home ownership and demand for appliances in newly furnished homes. He said LG Electronics, which is setting up its third factory in Sri City with a planned investment of Rs 5,000 crore, is prepared to meet future demand.

Haier announced an investment of around Rs 3,500 crore to set up a new plant in South India and said it is increasing domestic value addition by integrating local components. “We are trying, as much as possible, to not only produce in India, but also produce within our own factories,” said NS Satish, President, Haier Appliances India.

In 2025, Samsung Electronics India’s total sales crossed Rs 1 lakh crore, a milestone not previously achieved by any company in the appliances and consumer electronics segment in the country. The company said it will continue investing in India’s artificial intelligence ecosystem and participate in the production-linked incentive scheme for display modules.

“India market will be comparable to the US, European market and China once the GDP goes up and crosses USD 5 trillion,” said JB Park, President and CEO, Samsung Southwest Asia.

Godrej Enterprises Group said premiumisation will continue across key categories. Kamal Nandi, Business Head and Executive Vice President of the company’s Appliances Business, said frost-free refrigerators, split air conditioners and front-load washing machines are performing better than mass segments. He added that consumers are seeking value-driven offerings that provide convenience, comfort, and improved aesthetics.

From January 1, 2026, revised BEE star rating norms will come into effect for appliances including refrigerators, ceiling fans, air conditioners, and solar inverters. Companies said they are prepared for the transition.

“The upcoming BEE star rating revision is expected to further stimulate demand,” said Mukundan Menon, Managing Director, Voltas. He said the company’s refreshed BEE-compliant air conditioner portfolio and manufacturing investments position it to address the new requirements.

Saif Khan, Managing Director and CEO, BSH Home Appliances, said 2025 was a defining year for premium home appliances, driven by category creation and aspiration-led consumption. He said dishwashers recorded over 40 per cent pan-India growth and the company saw its highest-ever festive sales.

Appliances retailer Croma said Indian households increasingly shifted toward upgrading in 2025. “What’s changing fast is aspiration, with Tier 2 and Tier 3 markets driving the next wave of growth and offering significant headroom for smarter, future-ready upgrades,” said Shibashish Roy, CEO and Managing Director, Infiniti Retail. He added that growth momentum is expected to strengthen in 2026, supported by AI-enabled devices, connected homes, and solutions focused on efficiency, wellness, and convenience.