According to a report by BMI, India’s consumer market is expected to become the world’s third largest by 2027. This is due to the increase in middle to high-income households in the country. The report predicts that India’s household spending per capita will grow by 7.8% year-on-year, surpassing other developing Asian economies like Indonesia, the Philippines, and Thailand. The ongoing urbanization in India is also expected to contribute to consumer spending, as companies can easily reach consumers and open more retail stores to cater to their needs.
The report by BMI also highlights the role of India’s large youth population in driving increased consumer spending. Approximately 33% of the country’s population is estimated to be between 20 and 33 years old, and this group is expected to spend significantly on electronics. Communications spending is predicted to grow by an average of 11.1% annually to $76.2 billion by 2027, driven by a technology-literate urban middle class with increasing disposable income.
India’s urbanization trend is also seen as a catalyst for consumer spending growth. Companies can more easily access consumers and open physical retail stores to cater to their needs. In line with this, Apple and Samsung have recently opened retail stores in major cities like Delhi and Mumbai. Global investors, such as Blackstone Group and APG Asset Management, have also invested more money in India’s shopping mall business to capitalize on the growth in consumer spending.
Overall, BMI estimates that India’s household spending will exceed $3 trillion as disposable income rises by a compounded 14.6% annually until 2027. The majority of these households will be located in economic centers like New Delhi, Mumbai, and Bengaluru, and the wealthier households will mainly be in urban areas, presenting an opportunity for retailers to target their key markets.