According to a recent report by BMI, India’s consumer market is on a trajectory to claim the rank of the world’s third-largest by 2027. This ascent is attributed to the anticipated growth in middle to high-income households within the nation.
As of now, India occupies the fifth position globally, but the analysis from Fitch Solutions suggests that a remarkable 29% surge in real household spending is poised to propel India up two places in the rankings.
What further sets India apart is the forecasted outpacing of household spending per capita growth in comparison to other developing Asian economies, such as Indonesia, the Philippines, and Thailand, with a notable 7.8% year-on-year increase, according to the report.
The report states, “Overall, the gap between total household spending across ASEAN and India will also almost triple.”
BMI’s estimations project India’s household spending to surpass the $3 trillion mark as disposable income is projected to rise at a compounded annual rate of 14.6% until 2027. By that time, it’s envisaged that around 25.8% of Indian households will attain an annual disposable income of $10,000 or more.
The report highlights the geographic concentration of wealthier households primarily in economic hubs like New Delhi, Mumbai, and Bengaluru. This urban distribution proves advantageous for retailers seeking to target key markets.
A driving force behind India’s burgeoning consumer market is its sizable youth demographic. Approximately 33% of the nation’s population falls within the age bracket of 20 to 33 years, a cohort BMI expects to exhibit substantial spending, particularly on electronics.
The report anticipates a robust growth rate in communications spending, averaging 11.1% annually, culminating in a figure of $76.2 billion by 2027. This growth is attributed to a tech-savvy, urban middle class with expanding disposable incomes, which incentivizes expenditure on aspirational products like consumer electronics.
Furthermore, India’s ongoing urbanization trend is set to bolster consumer spending, offering easier access for companies to tap into markets and establish additional brick-and-mortar retail stores.
The surge in consumer demand has not gone unnoticed by major global players. In April, Apple inaugurated two retail outlets in Delhi and Mumbai, while Samsung announced plans to establish 15 premium experience stores across India in major cities like Delhi, Mumbai, and Chennai.
BMI’s report also points out the increased investments by global firms, including Blackstone Group and APG Asset Management, in India’s shopping mall industry, capitalizing on the growth potential of consumer spending.
