Consumption slowdown in Q4 to spoil full year's sales show

Kolkata/Mumbai: India's consumer electronics and smartphone sales slowed sharply in the March quarter, dragging growth for the fiscal year, as successive price hikes offset earlier GST-led relief and dampened demand amid rising geopolitical pressures. Daily essentials saw a slowdown in value growth after tax-cut triggered price reductions.

Sales of appliances such as air-conditioners, refrigerators and washing machines rose a modest 4-5% from a year earlier in the quarter, pulling FY26 growth down to 3-4% from 9-10% the previous fiscal year, according to industry estimates. Smartphone volumes fell in the quarter, hurt in part by an up to 30% increase in prices over the past four-five months, leaving annual growth nearly flat.

"FY26 has been a bad year and could be one of the worst for the electronics industry, with not a single quarter reporting meaningful growth," said Kamal Nandi, head of appliances business at Godrej Enterprises. Nandi attributed the slump to a string of setbacks through the year. "The first quarter was a washout due to a cooler summer. The second was hit by GST rate cut uncertainty. The festive quarter failed to deliver, and now two rounds of price hikes have wiped out the benefits of GST reductions," he said.

ACs, which account for nearly half of appliance industry sales, were the worst hit, with value growth slowing to 6-7% in FY26 despite a 10% GST cut. Entry-level refrigerator sales slipped marginally, while premium frost-free models remained flat. Washing machines were the lone bright spot, posting 12-13% growth in the just-ended fiscal year. In smartphones, sales declined more than 9% year-on-year in the March quarter, leaving full-fiscal year growth at a marginal 0.3%, according to Counterpoint Research, compared with 0.52% growth a year earlier.

"The combination of rising prices and cautious consumer sentiment weighed on demand, resulting in weaker retail conversions across channels," said Tarun Pathak, research director at Counterpoint. "Geopolitical tensions and elevated essential commodity prices are likely to continue pressuring discretionary spending, with India's smartphone market projected to decline by around 10% in calendar 2026."

Fast-moving consumer goods (FMCG) recorded just 2% growth in the March quarter, lower than 12% a year earlier, as GST-led price cuts dragged down value growth, according to Bizom.

Companies said underlying demand remained stable, but revenue growth was hit by lower prices. "There was about a 10% price cut across categories. Adjusting for that, growth would have been significantly higher," said Mayank Shah, VP at Parle Products. For FY26, FMCG sales value growth slowed to 5.6% from 9.5% a year earlier, Bizom data showed. According to the Retailers Association of India, sales growth in organised retail segments such as apparel, footwear, beauty and quick service restaurants saw single-digit sales growth last fiscal year, but the market has recovered post the festive season with double-digit sales performance.