Budget 2026 watch: Consumer durables sector pushes for tax stability, component localisation

Budget expectations: As India heads into the Union Budget 2026, the consumer durables and electronics sector is buoyant, though not without a measure of caution. Rapid urbanisation, rising disposable incomes and expanding consumption in Tier 2 and Tier 3 cities have turned consumer durables into one of the country’s fastest-growing industries. Industry estimates peg the market size at over $30 billion, with projections pointing to double-digit annual growth through 2027. If current momentum continues, India is expected to emerge as the world’s fourth-largest consumer durables market within the next two years.

Yet, beneath this growth story lies a significant penetration gap. Less than 10% of Indian households own an air conditioner, washing machines are present in only about one-third of homes, and refrigerator ownership, while relatively higher—still lags global averages. For manufacturers, this low base signals a vast runway for expansion, provided affordability improves and access widens, especially in price-sensitive markets beyond metros.

Government policy has already begun to reshape the sector’s manufacturing footprint. The Production Linked Incentive (PLI) scheme for white goods has attracted investment commitments of more than Rs 10,000 crore, with expected production output crossing Rs 1.7 lakh crore over the scheme period. Importantly, the programme has accelerated localisation of critical components such as compressors, motors and electronic control units, helping reduce import dependence and strengthen domestic supply chains.

Jasraaj S Kalra, Managing Director of Noble Group, says the sector is looking to Budget 2026–27 to strike a balance between demand stimulation and manufacturing scale. “Stable taxation and income-led demand measures are essential to boost consumption, while component localisation and electronics manufacturing support will enable scale. A demand-driven approach backed by strong domestic supply chains will help Indian manufacturers expand capacity, improve efficiencies and cut import reliance,” he said.

From a global manufacturing perspective, Tadashi Chiba, Managing Director and CEO of Panasonic Life Solutions India, notes that the Budget comes at a time when India’s broader economic momentum remains strong. “Continued emphasis on manufacturing-led growth through initiatives such as PLI and the Electronics Component Manufacturing Scheme, along with investments in infrastructure, logistics efficiency and R&D, will be critical to sustaining growth,” he said. Chiba also called for rationalisation of customs and GST duties on key components, including compressors, and correction of inverted duty structures to improve the cost competitiveness of locally manufactured appliances.

Energy transition priorities

Energy transition priorities are adding another layer to Budget expectations. Vinit Bediya, Chairman and Managing Director of Silver Consumer Electricals, said continued policy support for domestic manufacturing across solar PV modules, power electronics, motors, pumps and lighting solutions would be crucial. He emphasised the need for policy stability, rationalised customs duties on critical raw materials and incentives for backward integration to strengthen supply-chain resilience and enable MSMEs to invest in automation and localisation.

The Budget’s impact is also expected to extend beyond urban households. Rohit Bajaj, Co-Founder of Balwaan Krishi, highlighted the opportunity to support agri-focused MSMEs driving farm mechanisation in smaller towns and rural India, where mechanisation levels remain at 40–45%. Targeted measures such as easier institutional credit, R&D incentives and expanded PLI support for rural manufacturing, he said, could accelerate sustainable mechanisation and reinforce India’s Make in India ambitions.

Taken together, industry voices suggest that Budget 2026 will be closely watched for its ability to align consumption growth with manufacturing depth. A well-calibrated policy mix could not only unlock the next phase of consumer durables demand but also strengthen India’s push towards a resilient, self-reliant and globally competitive manufacturing ecosystem.