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    Say hello to a new all-consuming India

    Synopsis

    India's consumption is now a combination of a sprinting top-tier that is approaching affluent economy levels, and a mass market that, too, is cantering along. This makes India an interesting market for makers of all manner of things from European automobiles to Japanese ramen. This also widens product portfolios to use aspirational consumption to speed up the mass market. Companies that straddle both ends have an obvious advantage in India.

    Say Hello to a New All-Consuming India
    Consumer-facing companies that have been concerned over the slow emergence of the Indian middle class will draw comfort in the doubling of household consumption over the past decade. The acceleration in consumption has occurred over a period of Covid-induced economic contraction and a recovery amid an energy shock. The pace of growth opens more consumer wallets to discretionary spending, including that on durables. India's consumption is now a combination of a sprinting top-tier that is approaching affluent economy levels, and a mass market that, too, is cantering along. This makes India an interesting market for makers of all manner of things from European automobiles to Japanese ramen. This also widens product portfolios to use aspirational consumption to speed up the mass market. Companies that straddle both ends have an obvious advantage in India.

    That growth in the mass market is higher at the bottom of the scale - read: rural - than at the urban top also creates a bigger opening for consumer goods in the country. Withdrawal of food from over half of rural household budgets is an invitation to scale up distribution networks for personal care. Products not available in the countryside, such as high-end soaps and chocolates, will find their way into stocks of the village kirana. Premiumisation will set in lower-income brackets, which could make the Indian mass market a bigger draw for global companies accustomed to a slower pace of transition.

    Consumption in India bears a healthy relationship to its economic growth, and serves as a draw for investment in manufacturing for the country and rest of the world. The pattern of growth of consumption among income classes is also fairly robust, with both wealth and income effects aiding along the top and the bottom rungs. Consumption is expected to pull the economy through over the next decade as India's middle class attains its long overdue size.

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