Border tension eases: Consumer companies see demand recovery and revival in sentiment

Time of India

10-05-2025

With the easing of tension between India and Pakistan,
consumer goods companies
are hopeful of a revival in consumer sentiments and demand after a sudden dip in recent days, not just in border states but across the country, chief executives said.
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"While demand was adversely impacted in the affected towns, sentiments were down elsewhere too," said Pradeep Bakshi, managing director of Tata-owned appliance maker
Voltas
. "Now that the war is over, we expect people will come out."
The war-like situation in the past 4-5 days impacted normal life in multiple towns in Punjab, Jammu and Kashmir, Rajasthan and Gujarat, including Chandigarh, Mohali, Jalandhar, Amritsar, Srinagar, Jammu, Bhuj, Jodhpur and Rajkot, which were under blackouts and high alert amid missile and drone attacks from across the border.
Industry executives said the border tension was threatening to derail demand, which was showing green shoots of recovery after over ten quarters when high inflation in daily lives and low wage growth impacted consumption, particularly in mass market segments.
While wage growth remained muted this year, too, inflation has moderated significantly. Buoyed by income-tax relief and predictions of good monsoon rains, companies had forecasted a recovery in the second half of the fiscal. This was getting clouded due rising tensions between India and Pakistan after last month's Pahalgam terror attack.
"The ceasefire is a big relief for our entire team in the North," said Devaranjan Iyer, chief executive officer of departmental store chain Lifestyle International.
He said the business was adversely impacted in the border states as footfalls had crashed and stores, too, were getting shut by 6:30 pm due to blackouts.
"Sentiments were impacted everywhere as we saw drastic fall in sales and footfalls, even in our Delhi-NCR stores where there was no blackout," Iyer said. "This will now improve, while we expect consumers in the border states will return back in the next 2-3 days after their fear psychosis comes down."
Car and two-wheeler manufacturers and dealers, too, welcomed the ceasefire between India and Pakistan. A large automotive dealer in Rajasthan said there were zero walk-ins in Bikaner, Jodhpur, Ganganagar in the last few days even when they were not on the fringes. "We expect business to return from Monday and gradually pick up," he said.
Another automotive retailer said the business impact was severe in the border districts for the past 7-10 days. "There was an indirect impact in other parts of the country too as customers became cautious. But now with the ceasefire, things should improve and we expect to make up for the lost sales in the next 2-3 weeks with some promotions," he said.
According to Voltas' Bakshi, while AC sales had declined 25% year-on-year in April due to less intense summer this year, the drop worsened to 40% YoY so far in May due to the sentiment issues and several North Indian markets almost closed. States like Punjab, Rajasthan and Gujarat are big markets for cooling appliances in summer.
In other large markets like Delhi-NCR, Mumbai and Kolkata, companies said sales of discretionary products like apparel, cars and electronics had declined 20-50% sequentially this week over the last as multiple cities were on high alert and mock-drills were undertaken.
The ceasefire has come as a relief for companies selling essentials like staples, edible oil and packaged food like biscuits who were fearing major disruption in supply chains as the border firings had escalated to civilian areas in major towns on Friday night.
These firms were rushing to increase stock levels at distributors and retailers to 9-14 days compared with the usual 4-8 days and offering higher credit support to the trade for that, industry executives said.
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