India, Asia's third largest economy and a 1.2 billion-people-strong nation, is one of the largest consumer markets on the global canvas. Majority of the international players are scouting for larger pie in the Indian market and are busy strengthening their footprints in the country. Further, policy initiatives by the Government of India are allowing foreign players to tap Indian consumers and eventually create lot of opportunities (in terms of employment, investment, etc.) for the residents.
The Indian consumers are most optimistic about their incomes and the country's economy, says MasterCard Worldwide Index of Consumer Confidence. Out of the 14 markets studied in the Asia-Pacific region, India showcased the highest level of optimism with 82.1 points in the first half of 2012.
Another survey by Nielsen, a leading global research company, found that India is the second most positive country (after Indonesia) in terms of consumer confidence at 119 points for the second quarter of 2012.
Moreover, India is the third most favoured destination for investment after China and the US for major global companies, according to a UN report. The report anticipates that foreign investments in India could increase by more than 20 per cent in 2012-13.
Consumer markets have numerous dimensions and sub-segments that differ in market dynamics and predictions. Consumer durables, fast moving consumer goods (FMCG), retail, online retailing and luxury segment are broad categories in which Indian consumer market can be bifurcated.
The Indian textile and apparel industry (one of the components of retail sector), currently at a size of US$ 89 billion, is expected to grow 9.5 per cent to become an US$ 221 billion-industry by 2021, according to a report by Technopak. The domestic market for Indian textiles is anticipated to clock a compounded annual growth rate (CAGR) of 9 per cent to be worth US$ 141 billion by 2021. Home textile segment would grow by 8 per cent to reach the mark of US$ 9 billion, while the technical textile market is poised to expand by 10 per cent to become US$ 34 billion by 2021, according to the report.
The Indian retail market is expected to become US$ 1.3 trillion-sector by 2020, from the current level of US$ 500 billion, wherein revenues of modern stores will increase from current US$ 27 billion to US$ 220 billion, according to a recent study by an industry body.
Premium food and beverages (F&B) market (one of the components of FMCG sector), is also witnessing a major transformation across and within the categories (people are shifting from palm oil to refined versions, from polypack to tetrapack milk, from biscuits to cookies and so on). This change in trend has given birth to many more categories in premium F&B segment, which has reached at a market size of Rs 140 billion (US$ 2.53 billion) in FY 11, forming over 10 per cent of the total market. This premium F&B segment is expected to reach a market size of Rs 450 billion (US$ 8.14 billion) by FY 16 (forming 16 per cent of the total market), according to Tata's strategic research.
Consumerism is India is majorly being driven by favourable demographics, increasing income levels, faster urbanisation and explosion in rural consumption. Emergence of modern retail formats in a big way has made people more aware of brands and western culture which is eventually changing their lifestyles and profiles. Moreover, higher number of working women, smaller families and growing awareness of health and wellness are certain other factors that are giving a major impetus to the Indian consumer markets.