While consumer demand had started improving over the past four months after a prolonged slowdown, rising crude oil prices, supply disruptions and Prime Minister Narendra Modi’s recent call for austerity could threaten to derail that recovery, said executives and analysts.
The impact is expected to be sharpest in electronics.
Counterpoint Research has revised its 2026 India smartphone sales forecast and now expects unit volume to decline 12-13%, compared with an earlier estimate of a 10% fall, said Tarun Pathak, director at the market tracking company.
“Inflationary concerns and supply-side disruptions are beginning to affect consumer sentiment more sharply than expected,” he said.
Smartphone prices have risen about 15% in the past five months.Stocking Reduced
Prices of new handset models are 20-25% higher than older ones, according to Counterpoint. Prices of memory chips used in smartphones, televisions and laptops have more than doubled during the period.
The electronics industry continues to face the heat from surging memory chip prices and cautious inventory management by brands amid slowing sales, Atul Lall, managing director of contract manufacturer Dixon Technologies, told analysts on Tuesday.
Crude oil and commodity prices have continued to rise as the rupee has weakened, adding to the burden on import-dependent sectors. Mobile phone brands have reduced stock by 15-20% to bring down unsold inventories, leading to shortages of popular models amid the challenge to demand, said Kailash Lakhyani, founder chairman of the All India Mobile Retailers Association.
Prices of air-conditioners and refrigerators have already increased by over 20% since January due to commodities getting more expensive, rupee depreciation and rising logistics costs.
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Blue Star managing director B Thiagarajan said war-related impact will weigh on market sentiment and supply chains as the industry heads into the key summer season.
LIFESTYLE, DINE OUT
Retailers said the situation has changed just as urban demand had started recovering. Shoppers Stop managing director Kavindra Mishra said demand improved from mid-February through April and early May, but warned that rising fuel and raw material costs could hurt spending in the short term.
V-Mart Retail managing director Lalit Agarwal said war-led inflation could affect 70-75% of consumers’ need-based purchases, with agriculture, fertilisers, pesticides, logistics, power and irrigation costs likely to rise.
“But one respite we are able to see is the increase in minimum wages… which can give some benefit,” he said, referring to recent moves by some state governments after labour unrest. “However, if the war-led disruption continues, it may throw a little bit of a challenge in terms of consumer sentiment.”
Restaurant operators said fuel, imported ingredients and logistics costs are rising, forcing them to cut marketing expenditure, reduce menus and slow hiring to protect margins.
Abhayraj Kohli, founder of restaurant chains including Grandmama’s Cafe and TORII, said the industry was already dealing with commercial LPG shortages because India imports a large share of its cooking gas through the Strait of Hormuz.
“We added electrical equipment to manage operations, but then electricity loads increased, wiring costs went up because copper prices rose, and everything became really expensive,” said Kohli. “Our demand has come down by about 15% to 20%. People are becoming more cautious. It has pushed people into a scary space about what’s going to happen in the future.”
Some restaurant operators, however, are not seeing any slowdown in demand.
Burma Burma founder Chirag Chhajer said gas prices and imported ingredient costs have increased, hurting margins by 2-5%, but the company is avoiding immediate menu price hikes and instead signing longer-term supply contracts and stocking key ingredients.
“April has been the best April ever and May, there is even further growth in terms of revenue month on month,” Chhajer said. “People are going to eat, people are going to go out. It has become part of their lifestyle.”
