Mumbai, India – A recent report highlights the changing landscape of India’s consumer market, showcasing an increasing focus on premiumization and the rise of branded goods. With the country being home to 1.4 billion people, only a fraction of them falls into the country’s consuming class, estimated to be around 130-140 million people. This group of consumers, along with another 300 million emerging consumers, has seen a shift in spending habits, with a growing preference towards premium products and experiences.
According to the report from Blume Ventures, India’s consumer market is not expanding in size but rather ‘deepening,’ indicating that the gap between the wealthy and the rest of the population is widening. This trend has led to a surge in sales of ultra-luxury properties, premium smartphones, and branded goods while affordable options are losing market share. The “experience economy” is also booming, with high-priced tickets for international concerts selling rapidly.
The COVID-19 pandemic has further exacerbated the inequalities within India’s consumer market, with the wealthy getting richer while the lower-income population struggles to maintain purchasing power. The middle class, which has historically been a driving force for consumer demand, is facing challenges with stagnant wages and decreased savings. This, coupled with technological advancements leading to automation of certain job sectors, is creating additional hurdles for India’s economic growth trajectory.
In the midst of these challenges, the Indian government’s recent economic survey has raised concerns about the potential impacts of labor displacement due to technological advancements. As India remains predominately a consumption-based economy, any significant fall in consumption resulting from workforce displacement could have macroeconomic implications. The report emphasizes the need for strategic interventions to address these issues and ensure sustainable economic growth for the country.
Despite the obstacles ahead, there are short-term factors such as a boost in rural demand and tax incentives that could help stimulate spending in the near future. However, it will take concerted efforts and policy measures to address the longer-term structural challenges facing India’s consumer market and overall economic landscape. India’s ability to navigate these complexities will be crucial in determining its economic trajectory in the coming years.