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India’s consumer confidence continues to be the highest globally in the third quarter of calendar year 2015 (Q3), riding on a positive economic environment and low inflation. Nielsen’s findings reveal that the consumer confidence remained at the same high level (131) in the third quarter as in the second quarter of 2015. The current score helped India stay on top of the global consumer confidence index for the quarter, followed by the United States (119), Philippines (117) and Indonesia (116). Consumer confidence in India has remained high for eight consecutive quarters. Further, in the consumer confidence survey, nearly two third online respondents indicated a propensity to buy immediately as compared to postpone purchases, thereby once again helping India lead the global top 10 countries for this parameter during the quarter.
Global corporations view India as one of the key markets from where future growth is likely to emerge. The growth in India’s consumer market would be primarily driven by a favourable population composition and increasing disposable incomes. A recent study by the McKinsey Global Institute (MGI) suggests that if India continues to grow at the current pace, average household incomes will triple over the next two decades, making the country the world’s fifth-largest consumer economy by 2025, up from the current 12th position.
According to a report by Boston Consulting Group (BCG) and the Confederation of Indian Industry (CII), India’s robust economic growth and rising household incomes would increase consumer spending to US$ 3.6 trillion by 2020. The maximum consumer spending is likely to occur in food, housing, consumer durables, transport and communication sectors. The report further stated that India's share of global consumption would expand more than twice to 5.8 per cent by 2020.
India’s market is consumer driven, with spending anticipated to more than double by 2025. The Indian consumer segment is broadly segregated into urban and rural markets, and is attracting marketers from across the world.
The growing purchasing power and rising influence of the social media have enabled Indian consumers to splurge on good things.
A study by US-based networking solution giant CISCO, reveals that in India, the second-largest smartphone market globally, the number of smartphones is expected to grow strongly to over 650 million by 2019. India continues to witness high rate of mobile phone subscriptions. India added the highest number of net mobile phone subscriptions of 13 million during the third quarter of 2015, which was equal to the additions of China (7 million) and US (6 million) combined, as per a report by Ericsson. Sales of 4G-enabled handsets in India have jumped to 9.6 million in the quarter ending September 2015, from only 1 million in quarter ending December 2014, even though only one telecom is offering 4G services currently, as per telecom research firm CyberMedia Research (CMR).
According to CISCO’s Visual Networking Index (VNI) global mobile data traffic forecast for 2014–19, in India, one of the world's fastest growing Internet market, the number of tablets is estimated to reach more than 18 million by 2019.
Rating agency Crisil estimates that online retailing, both direct and through marketplaces, will grow threefold to become a Rs 50,000 crore (US$ 8.06 billion) industry by 2016. Also, the growth in Internet retail is expected to boost offline retail stores.
Amazon expects India to become its quickest market to reach US$ 10 billion in gross merchandise value (GMV) and to become its largest overseas market surpassing Japan, Germany and the UK.
Following are some major investments and developments in the Indian consumer market sector.
Smartphone brand Gionee is entering the urban market in a big way through tie-ups with India’s top large format retailers. The company’s smartphones will now be available at stores such as Spice, The Mobile Store, Mobiliti World, Jumbo Electronics, Croma Retail and Planet M retail, expanding its overall footprint to over a thousand retail stores.
The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in the electronics hardware-manufacturing sector through the automatic route. The government has also enabled 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail so as to attract more foreign investment into the country.
With the demand for skilled labour growing among Indian industries, the government plans to train 500 million people by 2022 and is also encouraging private players and entrepreneurs to invest in the venture. Many government, corporate and educational organisations are working towards providing training and education to create a skilled workforce.
According to a recently published TechSci Research report, "India Food Services Market Forecast & Opportunities, 2020", the food services market in India is expected to expand at a CAGR of over 12 per cent through 2020, primarily driven by increasing disposable income, changing lifestyle, and changing tastes and preferences of consumers. Another major factor propelling the demand for food services in India is the growing youth population, primarily in the country’s urban regions. India has a large base of young consumers who form the majority of the workforce and, due to time constraints, barely get time for cooking.
India's e-commerce market is expected to reach US$ 220 billion in terms of gross merchandise value (GMV) and 530 million shoppers by 2025, led by faster speeds on reliable telecom networks, faster adoption of online services and better variety as well as convenience, as per a report by Bank of America Merrill Lynch (BofA-ML).
According to the report titled "India Machine-to-Machine (M2M) Modules Market Opportunities & Forecast, 2020", the M2M modules market in India is expected to exceed US$ 4.4 billion by 2020. The market research firm stated that over the last few years, India has become one of the fastest growing markets for M2M modules in Asia-Pacific (APAC).
Research firm Nielsen projected that rural India’s FMCG market will surpass the US$ 100 billion mark by 2025. Online portals are expected to play a key role for companies trying to enter the hinterlands. The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a company’s reach.
Exchange Rate Used: INR 1 = US$ 0.0151 as on November 15, 2015
References: Media reports, press releases, Press Information Bureau (PIB
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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