Poised for a vibrant decade of consumption growth, India’s middle class will take the lead, fuelled by rising incomes, rapid urbanisation and a shift toward premium products
As India looks to bolster its global economic standing, rising disposable incomes and increasingly aspirational consumers are driving a move from cost-sensitive buying to premium, experience-led spending across sectors. At the helm of this transformation lies the growing middle class, which is likely to account for around 50 to 70 per cent of India’s population in the 2030s.
As the ultimate driver of the growth forecast for the next decade, the country’s working-age population (15 to 64 years) will reach 100 crore by 2030, making up one-fifth of the global workforce, as highlighted in a report titled ‘India 2030’ by Folk Frequency. With there being an expectation of up to 70 per cent growth in per capita income by 2030, the report adds that it is likely to reach USD 4,000 by 2030.
Reshaping The Consumer Market
India’s consumer market is on track to expand 46 per cent by 2030, making it the second-largest on a global scale. The report highlights that marking a significant shift in social structure, a large middle class provides a stable base for economic growth, primarily through the consumption of non-essentials.
While rising gross domestic product (GDP) is often viewed as an isolated growth factor and is dismissed as insignificant in driving social and cultural change, the report argues that rising GDP profoundly restructures the economic system from its roots. With rapid urban expansion transforming small towns in economic hubs, it also creates new consumer markets and alters mobility and lifestyle patterns.
Changing Spending Habits
Having transitioned from generational and systematic poverty, the rising middle class boasts an economy on the whole and marks a shift in the traditional buying behaviour patterns. The report explains this through a shift from a cautious approach to spending to a ‘try everything’ for experiences, services and products. It adds that the concept of affordable and premium reflects an attitude of consumption and experience rather than conservatism.
“Middle-class Indians are value-driven, yes, but that does not mean they do not seek premium. What they want is proof: does this make me feel better, save me time, signal something smart about me? So a Rs 3,000 dinner with friends once a month is something that more and more people are seeing as part of their lives,” highlights Gayatri Sapru, Founder and Chief Executive Officer (CEO) of Folk Frequency.
Supporting the trend, the report explains that as of March 2024, spending on casual dining rose by 49.2 per cent. On the other hand, fine dining also saw a 55.2 per cent increase compared to the previous year.
Shift Towards Premiumisation
With disposable incomes marking an increase, the consumers are inclining towards premium experiences. Emerging needs forecast a baseline expectation for premium experience and customer service. The report notes that there has been a boom in luxury categories and a premiumisation across the board, including fast-moving consumer goods (FMCG).
“The next wave will be driven by rising intent. As data prices drop and financial tools go mainstream, even smaller-town consumers are buying based on aspiration and global inspiration. Women, teens, empty nesters and new entrepreneurs are becoming powerful consumer clusters,” explains Sapru.
Led by economic stability, the middle class is marking a transition towards improved health outcomes and increased life expectancy. Around 40 per cent of Indian consumers are willing to pay a premium for products promoting health and wellness, compared to the global average of 29 per cent, as per Fedex.
Migration To Urban Areas
Marking a significant decline in rural population, India is set to witness population concentration in urban centres. Led by the tier two and tier three cities, it is expected that India will have added 416 million urban dwellers by 2050, as per an earlier report by the Population Division of the United Nations (UN) Department of Economic and Social Affairs.
This shift in population dynamics becomes crucial from the consumption aspect as urbanisation brings with it economic opportunities and improved living standards. The shift marks a transition from an agricultural value system and an individual becomes less dependent on the immediate community, village or town, which results in a reduced need to conform. The report notes that the need to maintain a close personal relationship with the village diminishes.
Strengthening Of Gig Economy
Contributing significantly to the country’s economy, the culture of gig work has been gaining prominence and reshaping the consumer market landscape. The flexibility and accessibility of gig work have provided alternative employment avenues for individuals from various sections of society, enabling them to overcome traditional barriers of education, language in the formal labour market, as per the Folk Frequency’s report.
The number of gig workers and platform workers in the country, which was 7.7 million in 2020-21, is expected to rise to 23.5 million by 2029-30, as per an estimation by the National Institution for Transforming India (Niti) Aayog in its report titled ‘India`s booming gig and platform economy’.
Another key aspect shaping the next generation’s consumer market landscape is the rise of the creator economy, which is categorised by individuals with access to a camera and the internet who can disseminate content across the world without stepping out of their homes.
Valued at around USD 976 million in 2023, the Indian creator economy is expected to reach around USD 3,926 million by 2030, as per the India 2030 report. Small businesses allow for freedom to control scale, which suits homemakers particularly well, as social media extends the canvas of possibilities much further than physical environments can.
With India’s rising middle class set to drive a new era of consumption led by premiumisation, urbanisation and digital innovation, the next decade will offer vast opportunities for brands and entrepreneurs to tap into a more empowered, experience-driven consumer base, as aspirations grow and spending habits evolve.
