If any industry can learn from King Bruce and the spider, it is the consumer durables industry. This industry faces competition from Chinese players, who are offering cheaper alternatives to consumers who are interested more in cost than anything else. Even the people who look for quality keep an eye on price, and this is one reason why the competition among even Indian players is high. Like the spider and the king, they have to try again and again to get it right.\n\n\u00a0"This sector can be broken into brown goods items like domestic appliances and fans, and white goods items like ACs and washing machines, which are big ticket items," says Pratap S. Gharge, the President and CIO of Bajaj Electricals Ltd. Gharge says that Bajaj is in the brown goods space. "There is huge competition from the Chinese and though we are trying to innovate, we find that the business model is unsustainable."\n\n\n\n\u00a0According to PWC's "2015-16 Outlook for the Retail and Consumer Products Sector in Asia," in India, there seems to be little prospect for deregulation of the type necessary to fully unleash growth. "When combined with low per capita incomes, the lack of reform will leave India a difficult market despite its obvious potential," says the report. But PWC holds out an olive branch for India--Michael Cheng, Asia Pacific & Hong Kong\/China Retail and Consumer Leader says in the report that India and China have active users of mobile technology and social media and notes that "...the use of these technologies for purchasing, while still nascent, is bound to increase as screen size and security issues are resolved."\n\n\u00a0Another important benefit for India is the relatively low penetration. According to the EIU (see table), in 2015, India's stock of TVs per thousand was estimated at 211, which is significantly lower than China's score of 878. In fact, in 2015, if the estimates are right, only Pakistan has fewer TV sets per thousand than India--and this indicates the huge unmet demand that is present in India.\n\n\u00a0And where there is demand, there is supply--and the cost associated therewith. Says Gharge, "For managing distribution efficiently, we are trying to use the theory of constraints to ensure end to end supply chain management." The theory of constraints was first mentioned by Eliyahu M. Goldratt in 1984 in his book "The Goal" and is a management philosophy that helps organizations to achieve goals. It revolves around inventories, money generated through sales, and operational expenses.\n\n\nIf consumers feel the pinch, or if even the shadow of a recession looms, people tend to hang on to their existing consumer durable products and will not upgrade. As a result, the industry suffers.\n\n\n\u00a0While following such best practices is most welcome, this sector, like any other, requires Government help. And one of the biggest things that the Government can do for this sector is introduce the GST (Good and Services Tax) Bill. Hailed by some as the biggest indirect tax reform since Independence, GST will remove the confusion caused by State and Central levies and create a uniform tax. Many indirect taxes like excise duty, service, central sales tax, value added tax, octroi will all come under GST, reducing the confusion faced by companies.\n\n\u00a0Once GST comes, there will only be three taxes--Central GST, State GST and Integrated GST, which will handle inter-state transactions. Finance Minister Arun Jaitley has said that GST will lead to economic integration of the country and help Indian GDP to grow by 2 percent. But to pass the GST Bill, two-thirds majority is needed in both the Lok Sabha and the Rajya Sabha; additionally, half the state assemblies will have to ratify it. No wonder it looks like GST will miss its promised deadline of April 1st, 2016. And this will further hurt India in general and manufacturing and the consumer durables industry in particular.\n\n\u00a0But what the Government can't do because of its non-majority status in the Rajya Sabha, it can do with other incentives. One good thing for this sector is that it is a part of the manufacturing sector and is expected to grow thanks to the Government's "Make in India" initiative. Many of the CIOs that we spoke to during our 2016 Year Ahead program said that Make in India holds great promise for the manufacturing sector, and the consumer durables sector is also expected to benefit. For example, Balaji Kulkarni, Global Head - IT Infrastructure and Applications, Crompton Greaves Ltd, says, "Make in India, Digital India--these kind of things are driving the economy. GST will also help us. In my opinion, current government initiatives will be driven through IT." According to an EY Study on Indian electronics and consumer durables segment, 65 percent of the current demand for electronic products is met by imports. If some percent of this can be reduced, then the local industry will benefit tremendously.\n\n\u00a0But every driver comes with a setback. This industry usually benefits with rising disposable incomes--if you get a salary raise, chances are high that you want to replace your old TV set with a flat TV, or buy an additional TV for the bedroom--but it suffers from the same problem. If consumers feel the pinch, or if even the shadow of a recession looms, people tend to hang on to their existing consumer durable products and will not upgrade. As a result, the industry suffers.\n\n\u00a0But innovation is always the key\u2014if users see value, they will buy. Highlighting this, Dr. John Cherian, Head of IT, India Market at Philips India Ltd says, "The industry is going towards the Internet of Things. Everything will be connected. People want to get things connected. We are working on rice cookers and coffee makers which can cook when you are travelling home from the office." Such innovations will boost the sector even during a slowdown.\n\n\n\n\u00a0Another way you can dampen the shock is by becoming an export hub--that way, if your local demand falters, you can always depend on foreign economies that are doing well to keep you in the black. With this in mind, EY says that large Indian and global consumer durables companies have announced investments of around $1.4 billion over the coming years in India.\n\n\u00a0But much more remains to be done, say experts--EY points out that the inverted duty structure due to FTAs makes India manufacturing uncompetitive for white goods such as washing machines, refrigerators and air conditioners; while this was addressed in Budget 2014 and 2015 by custom duty reduction on TV panels and parts and refrigerator compressor parts, more needs to be done to increase margins. The local supplier base is also not up to the mark, and importing even a few components can push up costs, making it unviable to make in India.\n\n\n\n\u00a0Cost will play an increasingly important role in the future--according to CEAMA (Consumer Electronics and Appliances Manufacturers Association), while urban India accounts for 65 percent of total revenues, in the future, rural areas will account for future growth. Rural India accounts for 69 percent of India's population and this market may be tough--people are bound to be cost conscious, and getting products and spares to remote areas may further erode margins.\n\n\u00a0But this said, rural India seems to be getting serious about consumer durables. EY says that around 50 percent of the rural population owns a TV, 8 percent own refrigerators and around 1 percent owns washing machines. This is heavily under penetrated and there is greater demand. But one problem is that many rural areas have frequent power cuts, and this might curb their appetite for electronic goods.\n\n\nRural India seems to be getting serious about consumer durables. EY says that around 50 percent of the rural population owns a TV, 8 percent own refrigerators and around 1 percent owns washing machines.\n\n\n\u00a0But a spurt in manufacturing and consumption of consumer durables may change this--or at last make people in rural areas rely more on generators, solar energy and wind power to power their devices. Manufacturing--of which consumer durables is a part--is the engine of the economy and accounts for 17 percent of India's GDP and employs 9.4 percent of India's population. This creates an enduring industry that makes the durables that we consume.