Last Updated: April 27, 2015
CEO and President, South West Asia Samsung
Updated: February, 2015
DURABLES SECTOR REPORT | October, 2014
FMCG SECTOR REPORT | October, 2014
India's consumer confidence continues to remain highest globally and showed improvement in the fourth quarter of calendar year 2014 (Q4), riding on positive economic environment and lower inflation. Nielsen's findings reveal that the consumer confidence of urban India increased by three points in Q4 from the preceding quarter. With a score of 129 in Q4, urban India's consumer confidence is up by 14 points from the corresponding period of the previous year (Q4 of 2013) when it stood at 115. The current score helps India stay on top of the global consumer confidence index for the quarter and is followed by Indonesia and Philippines, each of which have a score of 120.
The ensuing optimism among consumers and the slowdown in China have combined to help India unseat China at the top of Credit Suisse Research Institute’s Emerging Consumer Survey study released recently. The survey conducted across nine emerging economies has seen India jump four ranks. Average household incomes increased 10 per cent in India in 2014 after remaining nearly the same for two years, the study claimed. This revival in consumer sentiment has primarily been driven by urban India.
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.
Global corporations view India as a vital market for the future. India has a young demographic and a middle class with rising disposable income. If the country can sustain its current pace of growth for some time - and that is likely - average household incomes will triple over the next 20 years and India will become the fifth largest consumer economy in the world by 2025, as per a study by the McKinsey Global Institute (MGI).
The Government of India has also played a major role in the growth of this segment. It has enacted policies that have attracted foreign direct investment (FDI) and as a result boosted economic growth.
The growing purchasing power and the rising influence of the social media have helped the Indian consumers to splurge on good things. A study done by a leading industry body and Yes Bank has stated that the consumer spending in India is expected to quadruple to US$ 4.2 trillion by 2017.
As per GSMA's study 'Smartphone forecasts and assumptions, 2007-2020' India ranks fourth in the top 10 global smartphones markets. The country had 111 million smartphone connections in the April-June quarter of 2014, behind leader China, US and Brazil.
India could become the world's largest middle class consumer market with a total consumer spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte titled 'India matters: Winning in growth markets'.
On the back of better incomes and increasing affordability, the consumer durables market is anticipated to expand at a compound annual growth rate (CAGR) of 14.8 per cent to US$ 12.5 billion in FY15 from US$ 7.3 billion in FY12.
Online retailing, both direct and through marketplaces, will grow threefold to become a Rs 50,000 crore (US$ 8.06 billion) industry by 2016, as per rating agency Crisil. Also, the growth of internet retail is expected to boost offline retail stores.
Following are some of the major investments and developments in the Indian consumer market sector.
The Government of India has allowed 100 per cent FDI in the electronics hardware-manufacturing sector through the automatic route. It has also enabled 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail to attract more foreign investment into the country.
Hyderabad will soon have a Rs 100 crore (US$ 16.12 million) National Institute for Footwear Design and Development. The Government of Andhra Pradesh has set aside the required land at Gachibowli in Cyberabad. Funds for the centre have been sanctioned by the Ministry of Commerce, India.
With the demand for skilled labour growing among Indian industries, the government plans to train 500 million people by 2022, and is encouraging private players and entrepreneurs to invest in the venture. Many government, corporate, and educational organisations are putting in the effort to train, educate and produce skilled workers.
India could soon become an important market for wearable technology such as smart watches and fitness monitors, driven by consumer interests in these latest gadgets and the increasing spending on consumer durables. In Accenture's Digital Consumer Tech Survey 2014, respondents from India were most interested in buying fitness monitors (80 per cent), smart watches (76 per cent) and internet-enabled eyeglasses (74 per cent).
Research firm Nielsen has projected that rural India's FMCG market will go past the US$ 100 billion mark by 2025. Online portals are expected to play a key role for companies trying to break into 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$ 0.016 as on February 25, 2015
References: Media Reports, Press releases
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.