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How India will consume in 2030: 10 mega trends

India will be home to more than one billion internet users by 2030 Image: REUTERS/Rupak De Chowdhuri

07 Jan 2019

Nikhil Prasad Ojha

Partner and Head of Strategy Practice, Bain & Company, India

Zara Ingilizian
Head of Shaping the Future of Consumption; Member of the Executive Committee, World Economic Forum

This article is part of the World Economic Forum Annual Meeting

Over the next decade, consumption in fast-growth consumer markets such as China, India and Southeast Asia will be reshaped by the Fourth Industrial Revolution

The Future of Consumption in Fast-Growth Consumer Markets, a project in collaboration with Bain & Company, focuses on the emerging markets that comprise more th
studying China in 2017, for 2018 it turned its attention to India.

India is one of the fastest-growing economies in the world. By 2030, it is on course to witness a 4x growth in consumer spend. It will remain one of the youngest nations
one billion internet users. The new Indian consumer will be richer and more willing to spend, and unlike her predecessors, she will have very specific preferences.

The following 10 mega trends for India in 2030 can help businesses and policy leaders envision the India of the future. The trends draw upon the research and consume
Forum and Bain for the Insight Report on the “Future of Consumption in Fast-Growth Consumer Markets: India”.

1. The Indian middle class will truly come into its own

By 2030, India will move from being an economy led by the bottom of the pyramid, to one led by the middle class. Nearly 80% of households in 2030 will be middle-inco
class will drive 75% of consumer spending in 2030.

2. Upward income mobility will drive growth across all consumption categories

As 140 million households move into the middle class and another 20 million move into the high-income bracket, they will spend 2-2.5x more on essential categories (fo
gadgets, transport and housing) and 3-4x more on services (healthcare, education, entertainment and household care). Upper-middle-income and high-income entrants
ownership of durables (washing machines, refrigerators, TVs and personal vehicles).

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3. Half the incremental rupees will go into buying more, the rest nearly equally into buying better and buying new

Half the incremental consumer spend by 2030 will be simply to buy more of the products and services being consumed today. Affordable options will continue to be imp
equally on upgrading to premium offerings and including new variants in existing routines, such as adding organic food items and a new skincare regime, or adopting ap
category addition will drive a significant share of incremental spend on eating (food and beverages at home, and dining out), looking good (personal care and apparel) a
packs and gadgets).

4. Aspirations are fast converging across urban and rural India, and better access will transform this intent into actual spend

The internet and smartphones have significantly bridged the information divide between consumers in urban and rural India. Beyond the top 40 cities, developed rural a
similar income profile. At a given income level, both these consumer groups desire a similar standard of living, aspire to a similar set of brands and are equally comforta
Rural India’s strong desire to consume is presently constrained by poor access to roads, power, organized retail and financial services. Future efforts to improve physica
innovative distribution channels, will enhance well-being and unlock the true consumption potential of rural India.

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5. Millennial and Generation Z preferences will significantly shape the market

These consumers will be able and willing to spend more but will also be more discerning. In 2030, 77% of Indians will be born in the late 1980s and onwards. This gene
to more product and service options than their predecessors. These youngest Indians already exhibit the greatest willingness to increase spending over the next 10 yea
what they consider "best in class" offerings in every consumption category, from apparel to cars. Businesses will have richer, more willing buyers, but these buyers will b
choices for themselves and their families.

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6. Digitally influenced consumption will become the norm

"Connectedness" will drive a significant difference in preferences, even at the same income level. As many as 50-70% of the most digitally connected consumers today,
platforms for product discovery and pre-purchase research. By 2030, more than 40% of all purchases will be highly digitally influenced, up from 20-22% today.

Income and age may have been the traditional drivers of preferences, but in the future, preferences will be significantly driven by a consumer’s degree of connectednes
same income level, the more "connected" consumer (by internet and smartphone) will spend well, own durables, premiumize to better products (according to her income
serve her needs. Her less connected counterpart is likely to spend frugally, own few durables and continue buying more of the same.

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7. India’s eternal hunt for value will aid the growth of e-commerce, ‘value for money’ brands and category extensions

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Indian consumers will be willing to adopt value-for-money brands that have "just right" features and prices. India’s new consumers have aspirations to consume more (a
but they are dispersed across tens of thousands of urban and rural towns. Asset-light e-commerce models, supported by offline partnerships and demand-aggregators,
markets in a cost-efficient manner. Businesses will also have an opportunity to unlock spend on new category extensions.

For instance, dining out will become a significant area of food and beverage spend (up from more than 10% today), driven by the increasing use of app-based meal deli
especially by upper-middle-income and high-income working consumers. One in four of these consumers has already begun to increase their spend on entertainment to
services. Affordable and innovative options can unlock massive incremental spend and establish new variants of consumption in many existing categories.

8. Technology-enabled new business models will leverage inherent comfort with ‘usership’ and the desire for increased convenience and well-being

As the original usership economy, India has lessons for the world. Indians have traditionally used public transport services over owned vehicles, and furnished homes u
than new purchases. Digital platforms for renting and sharing will speak to this usership mindset, as well as to the tech-savviness of future consumers. Subscription mod

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Club, Amazon India Grocery Pantry and Fab Bag, will serve the value-conscious Indian keen to access new brands and products for a small recurring spend. Digital pla
Indian consumer’s prime aspiration - the desire for greater well-being for themselves and their family.

9. Business, policy and civic society leaders will collectively drive an inclusive, healthy and sustainable future for India

India presents a host of exciting business opportunities in the next decade. At the same time, the next phase of India’s growth story offers stakeholders a chance to sha
growth, from which other fast-growing markets can learn. Building on the momentum of collaborative efforts such as Skill India and Eat Right India, public-private-civic-s
key societal challenges facing India today: the need for skills and jobs for its working age majority; the greater inclusion of rural India; and the building of a healthy and s

10. Firms will thrive by innovating for India and embracing a 'founder’s mentality'

Companies will go a step beyond replicating Western models at low costs; they will localize and personalize business models and product/service offerings according to
their Indian consumer. In the past, companies that have sustained growth in India have been ones with an insurgent mission, frontline obsession and strong owner’s min
critical capability for the future, for small and established businesses alike. Entrepreneurial and agile organizations will be best positioned to capture the full potential of c
diverse market that is India.

India in 2030 will be a playground for growth and innovation for consumer businesses - both Indian and global, established and emerging. The transformations in the Ind
consumption, awareness and tech-savviness will create massive opportunities. India in 2030 will also be a platform for stakeholders to shape a path of inclusive and res
across the world to follow.

This blog draws from the Insight Report "Future of Consumption in Fast Growth Consumer Markets: India", published in January 2019 by the World Economic Forum in

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Written by

Nikhil Prasad Ojha, Partner and Head of Strategy Practice, Bain & Company, India

Zara Ingilizian, Head of Shaping the Future of Consumption; Member of the Executive Committee, World Economic Forum

The views expressed in this article are those of the author alone and not the World Economic Forum.

Global Risks Report 2020

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