Our Blog

Consumption in India is set to triple to $4 trillion by 2025 as rising affluence drives changes in consumer behaviors and spending patterns that have big implications for companies, according to a report released today by The Boston Consulting Group’s (BCG) Center for Customer Insight (CCI), The New Indian: The Many Facets of a Changing Consumer. Nominal year-over-year expenditure growth of 12% is more than double the anticipated global rate of 5% and will make India the third-largest consumer market by 2025.


The shape of this growth will be influenced by the following factors:


The elite and affluent income segments will constitute 40% of all spending by 2025; for the first time, the wealthy will represent the largest consumption segmen


Emerging cities (those with populations of less than 1 million) will be the fastest growing and will constitute one-third of total consumer spending by 202


Three-fourths of all households will be nuclear familie


Digital channels will influence 30% to 35% of all retail sales by 2025 and 8% to 10% of retail spending will be onlin


“India’s consumer market is poised for fundamental change,” said Nimisha Jain, a BCG partner and report coauthor. “As the consumer market continues to grow and evolve, companies will need to shed conventional wisdom, try multiple business models simultaneously, and be prepared for rapid change internally to adapt to changing consumer needs and behaviors.”


Among the factors that will shape consumption is India’s unique pattern of urbanization, in which emerging cities are the fastest growing. About 40% of India’s population will be living in urban areas by 2025, and city dwellers will account for more than 60% of consumption. Expenditures in these cities are already rising by nearly 14% a year, while consumer spending in India’s biggest cities is increasing at about 12% a year. Consumers in these cities behave differently from big-city consumers. They have a strong value-for-money orientation, significant local-culture affinity, and a more conservative financial outlook.


Another important trend is shifting family structures. The extended Indian joint family has given way to nuclear households, (a couple or a single person with or without children). The proportion of nuclear households, which has been on the rise during the past two decades, has reached 70% and is projected to increase to 74% by 2025. This ongoing shift is significant to marketers because nuclear families spend 20% to 30% more per capita than joint families.


“A set of emerging social trends could reshape consumption patterns significantly,” said Abheek Singhi, a BCG senior partner and report coauthor. “These include more—and better educated—women taking their rightful place in society, greater pride in being Indian, and increasing time compression, each of which will drive exponential growth in various categories differently.”


BCG CCI’s most recent consumer survey in India included 10,000 consumers in 30 locations nationwide and studied consumption in more than 50 categories.  The research found that the classic S-curve growth pattern does not always hold true and that different categories are exhibiting very different growth trajectories.  It also shows a steady shift in consumers’ aspirations and spending behaviors in certain categories. For example, immediate gratification is becoming more important than asset creation. The biggest desires of aspirer households used to be to own a house and a car; today, many more of these consumers want to take international vacations. Similarly, affluent households are becoming comfort seekers, and they are willing to pay for it.


In addition, the internet is an increasingly pervasive factor in India’s commerce, and its influence will only expand. Online spending is taking off: in the past three years, the number of online buyers has increased sevenfold to 80 million to 90 million. Digital’s influence on broader consumer spending is significant and growing rapidly. Digitally influenced spending is currently about $45 billion to $50 billion a year, and that figure is projected to increase more than tenfold to $500 billion to $550 billion—and to account for 30% to 35% of all retail sales—by 2025. As a result, omnichannel interaction is more and more important, but its significance varies by category. Consumers’ purchase pathways also are increasingly complicated.


“Already, a rising number of consumers in all segments are using the internet as their first port of call in framing and driving their purchase decisions,” said Kanika Sanghi, a BCG principal and report coauthor. “Our research found that about 70% of those who have access to the internet go online to make informed purchase decisions. As consumers get more comfortable with digital capabilities, their usage patterns exhibit growth that belies age and other demographic variables.”


Source:Globe Newswire

The automobile sector of India is one of the largest in the world and accounts for over 7.1 per cent of India’s GDP. It also contributes to nearly 22 per cent of the nation’s manufacturing GDP. The sector was first opened to foreign direct investment (FDI) in the year 1991 amid the liberalization of the Indian economy and has come a long way since.


The industry produced a total of 23.96 million vehicles in April-March 2015, registering a growth of 2.58 per cent over the same period last year. The country is also currently the 6th largest market in the world for automobiles and is expected to become the world's third-biggest car market by the year 2020. As per the Automotive Components Manufacturers Association of India (ACMA), the world standings for the Indian automobile sector are as follows:


• Largest tractor manufacturer


• 2nd largest two wheeler manufacturer


• 2nd largest bus manufacturer


• 5th largest heavy truck manufacturer


• 6th largest car manufacturer


• 8th largest commercial vehicle manufacture




· By 2020, India is expected to be the third largest automotive market by volume in the world. Tractor sales in the country are expected to grow at Compound Annual Growth Rate (CAGR) of 8-9% in the next five years, enhancing India's market potential for international brands.


· Two-wheeler production has grown from 8.5 million units annually to 15.9 million units in the last seven years. Significant opportunities exist in rural markets.


· The emergence of large automotive clusters in the country: Delhi-Gurgaon-Faridabad in the north, Mumbai-Pune-Nashik-Aurangabad in the west, Chennai- Bengaluru-Hosur in the south and Jamshedpur-Kolkata in the east.


· Global car majors have been ramping up investments in India to cater to growing domestic demand. These manufacturers plan to leverage India's competitive advantage to set up export-oriented production hubs. A Research & Development (R&D) hub: strong support from the government in the setting up of National Automotive Testing and R&D Infrastructure Project (NATRiP) centers. Private players such as Hyundai, Suzuki, and General Motors are keen to set up an R&D base in India.


· Electric cars are likely to be a sizeable market segment in the coming decade.




100 per cent Foreign Direct investment (FDI) is allowed under the automatic route in the auto sector, subject to all the applicable regulations and laws.


India is fast on its way to becoming the primary global automobile manufacturer. The government of India is more than willing to lead this charge and assist this sector in every way to help it achieve its full potential.


Source:Business World

Dubai, Mar 21 (PTI) India and the UAE have agreed to strengthen their bilateral trade and investment ties as top industry leaders from both countries met at a conference held here


Speaking at the second India-UAE conference on globalisation yesterday, UAEs Cabinet Member and Minister of Culture and Knowledge Development Sheikh Nahyan bin Mubarak Al Nahyan expressed optimism about the growth of trade and investment between India and the UAE and favoured greater international cooperation and exchange to help the global economy


Nahyan also praised All India Management Association (AIMA), organisers of the one-day conference, for creating a platform to promote mutual understanding and cooperation between policy and business leaders of the two countries, a statement sai


Indias ambassador to the UAE Navdeep Singh Suri also addressed the conference and highlighted the growing trade and investment ties between the two countries


Suri said the frequent interactions between Prime Minister Narendra Modi and Crown Prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan were far-reaching developments in the relationship between the two countries


Organisers of the event said the conference included focused sessions on some key areas of mutual interest and cooperation between India and the UAE


They said that the UAE was already the largest trading partner of India in West Asia and the two countries have now decided to form a Comprehensive Strategic Partnership


More than 20 agreements have been signed between the two countries in the past two years for collaboration in diverse areas including infrastructure, renewable energy, defence production, joint military exercises, maritime security, counter-terrorism, space technologies, cyber security, agriculture and human traffic prevention, they said


UAEs commitment to invest USD 75 billion in Indian infrastructure is of particular significance to the growing relationship, they added


India sources a substantial part of its oil requirement from the the UAE and the gulf country is helping it build its oil reserve. The Abu Dhabi National Oil Company has agreed to store oil at Indias reserve storage.


Source:India Today

India is targeting an ambitious 40-notch jump in the World Bank’s Doing Business survey this year. Last year, its rank rose by just one place to 130 in the survey that measures the ease of doing business in various countries.


According to an output-outcome framework document prepared by the government, India wants to reach the 90th rank in 2017-18 and 30th by 2020.


“Better rank in ease of doing business and greater awareness about opportunities in India in manufacturing sector would lead to growth in the manufacturing sector,” the document said.


Department of industrial policy and promotion (DIPP) secretary Ramesh Abhishek said the targets are feasible.


“We are hoping to do extremely well in five categories: starting a business, construction permits, paying taxes, trading across borders, and resolving insolvency. We are already in the top 50 in three parameters out of 10. We are facing challenges in two criteria: enforcing contracts and registering property because of the complexity involved,” he said.


India was ranked within the top 50 countries in parameters such as protecting minority investors (13th), getting electricity (26th) and getting credit (44th), among the 190 countries surveyed. India’s worst rank was in dealing with construction permits, where it was placed 185th. It ranked 136th in resolving insolvency, 138th in registering property, 143rd in trading across borders and 172nd in both paying taxes and enforcing contracts.


Arindam Guha, partner at Deloitte Touche Tohmatsu, said it will be an uphill task to achieve the targets since it involves many stakeholders other than the central government.


“Government has to proactively pursue with the state governments and local bodies as well as the Supreme Court and high courts for necessary reforms. Between Delhi and Mumbai, the former has been an underperformer though the latter has picked up in recent times, especially in dealing with construction permits. This may prove to be a drag on India’s overall ranking,” he added.


This year’s budget allocated Rs272.48 crore under the scheme of investment promotion that will be spent on launching a 360 degree awareness campaign for better ease of doing business ranking and to attract investment in 25 sectors selected under Make in India.


DIPP has also involved the National Productivity Council and the United Nations Development Programme to conduct user feedback to evaluate the effectiveness of its reform measures.


To break into the top 50 in the World Bank ranking, India needs to set up fast-track commercial courts, dispose of cases quickly with minimum adjournments and establish e-courts for electronic filing of complaints, summons and payments, a government official said on condition of anonymity.


ALSO READ | Ease of doing business: DIPP calls for fast-track commercial courts


Aiming to make it easier to do business in India, finance minister Arun Jaitley in his 2017-18 budget presented on 1 February promised to simplify labour laws and abolish the foreign investment and promotion board (FIPB).


Jaitley announced legislative reforms to simplify, rationalize and amalgamate existing labour laws into four codes—wages, social security and welfare, industrial relations, and safety and working conditions.


The finance minister said a road map for scrapping the FIPB that scrutinizes foreign investment proposals will be announced soon as part of the government’s financial sector reforms.


The National Democratic Alliance (NDA) government at the centre plotted an eight-point strategy to make it easier to do business in India. Departments will now hold stakeholder consultations for feedback on reforms undertaken, and also engage with respondents to ensure the reforms are implemented at the ground level. Each department will review progress every week in carrying out the necessary reforms.



Russia will not only welcome Indian talent but will also help to have comfortable stay in their country, which will be a win-win for both the countries, Russian Minister of Trade and Industry Denis Manturov told ET amid proposed visa changes in the USA that might impact movement of professionals there in the future. 


"We welcome Indian brains to Russia. We are open to high-skilled Indian workforce in Russia and help them settle down in our country. Indians and Russians have the best mathematicians in the world -- both have high-skilled workforce. The government of Russia will work towards this idea of welcoming Indian brains," Manturov told ET in an exclusive interview in Delhi last Friday. 


The Russian minister, on his second visit to India in less than six months, is here as part of the celebrations on the occasion of 70 years of bilateral economic ties, and he will also create the ground for PM Narendra Modi's visit to St Petersburg for the International Economic Forum between June 1 and 3. Modi is the guest of honour at the Forum or SPIEF (St Petersburg International Economic Forum) with India as the guest country for the Forum, often described as the Davos of Eurasia. 


Pointing out that SPIEF would be a perfect match making opportunity for the Indian corporate sector, Manturov said the PM's presence will add heft to the privileged and special Indo-Russian strategic partnership. 


"We are currently in the process of giving final shape and fine tuning the agenda for SPIEF. The Forum held at an important year of bilateral ties will give a good opportunity for the businesses and corporate sectors." Modi and Russian President Vladimir Putin will jointly address SPIEF that will include over 5000 business honchos, including some even from the West. 


The minister listed heavy engineering, metallurgy, agriculture and farming as areas where India and Russia could work together to produce results besides the traditional areas. "I was in Chennai to attend an engineering meet where Russia was a partner country. The two sides are also looking to cooperate at the small and medium scale industries. We are exploring joint ventures in the SME sector. Besides the two sides can cooperate in certain areas of microbiology and pharmaceutical products.


When asked about Russian participation across industrial sectors under the Make in India initiative of the Modi government, Manturov said, "Such projects have to be economically viable. We expect that Russian industrial firms will have the advantage. I was on a business mission to Andhra Pradesh, Rajasthan, Maharashtra and Goa last October. The challenge is to increase bilateral trade to $30 bn from the current $7 bn by 2025." 


Source:The Economic Times