India is on course to emerge as the world’s consumption capital, outpacing major global economies, according to a report by Angel One and Iconic Asset.
The report spotlights the country’s rapid growth in consumer spending, bolstered by demographic shifts and economic expansion.
Consumption currently constitutes 56 per cent of India’s Gross Domestic Product (GDP), making it the fastest-growing segment of the economy.
With the world’s largest expanding consumer base, India’s consumption is projected to double by 2034, the report highlights.
A key driver of this surge is the rise in nuclear households, which is outpacing population growth and significantly contributing to increased expenditure.
Additionally, India is set to lead global workforce expansion, further fuelling consumer spending.
The report estimates that India’s savings will witness a staggering tenfold rise over the next 25 years.
Between the financial years 1997 and 2023, total savings amounted to USD 12 trillion; however, by 2047, this figure is expected to soar to USD 103 trillion, unlocking substantial potential for incremental consumption.
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The report also notes that recent tax cuts in the Union Budget will release an estimated ₹1 lakh crore into the economy, which could drive additional consumption worth ₹3.3 lakh crore. This could potentially boost India’s GDP by 1 per cent.
Drawing comparisons with other major economies, the report states that during periods of robust economic growth, both the United States and China witnessed discretionary consumption surpassing essential spending.
“Consumption spend in US increased 10X during phase of strong rise in per capita income. India can witness similar growth in consumption as per capita income rises,” the report states.
Among the fastest-growing sectors in discretionary consumption are consumer electronics, apparel, accessories, including jewellery, and the experience economy.
Despite rapid modernisation, traditional kirana stores continue to dominate retail trade, with 92 per cent of transactions still occurring through them. However, the report suggests that modern retail presents an immense opportunity to scale and capture a larger market share.
Furthermore, India’s youth population is set to play a pivotal role in the nation’s consumption boom.
With more Generation Z individuals than the entire US population, the report notes that by 2035, every second rupee spent will come from a Gen Z consumer.
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