The Age of the Indian Consumer

India's large youth cohort can make it the world's biggest consumer market. But it needs to address the jobs and skills crisis to reap the demographic dividend

- ARNAB DUTTA

Over the last two decades, the slow yet steady rise in income levels in India and growing aspirations of its vast youth pop- ulation have fuelled a thriving consumer goods market. Today, the country's consumer economy stands only behind China, the US, Germany, and Japan, and is set to take the third spot next year as it continues to grow faster than all other major economies, says UBS Securities.

Industry watchers suggest that consumer demand in India is at a tipping point and could set the tone for the next decade when it is likely to overtake both Germany and Japan. A report by Edelweiss Mutual Fund says India's consump- tion expenditure could be the second highest in the world as early as 2030. It adds the growing middle and upper-middle income groups will help increase consumption ex- penditure by 46% during the same period. And those predictions were made before the government gifted the two cohorts a bonanza in Union Budget 2025-26 by cutting income tax rates in a bid to get them to open the spending taps in full force.

Data from the World Economic Forum (WEF) suggests that those projections may not be fanci- ful after all. India had a meagre 17 million households in high to upper-middle class segments in 2005. The number grew four-fold to 69 million by 2018. By 2030, that is expected to jump a further 185% to 197 million, with nearly 7% of India's households in the high-income bracket.

These projections have got the consumer goods industry dreaming, despite the temporary blip in recent years. “India's consumer market is poised for a significant transformation,” says Rohit Jawa, CEO and Managing Director of India’s largest FMCG firm Hindustan Unilever.