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.
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$ 8.08 billion) industry by 2016, as per rating agency Crisil. Also, the growth of internet retail is expected to boost offline retail stores.
The following are some of the major investments and developments in the Indian consumer market sector.
Chinese lighting solutions company Opple Lighting has launched its first retail store in Chennai.
The Rs 3,000 crore (US$ 485.12 million) company, which is present in over 50 countries, provides lighting solutions for retail as well as commercial users. Opple plans to set up 50 exclusive brand outlets and around 400 shop-in-shop stores over the next three years, as per Mr S Venkataramani, India Chairman, Opple Lighting.
Amazon and India's Future Group have signed a deal to jointly sell goods over the online platform. Future Group will sell over 45 own labels of apparel to start with, followed by in-house brands in the home, food and electronics categories.
Huawei, the third-largest maker of smartphones globally with a market share of 6.7 per cent, has announced an exclusive tie-up with Flipkart to sell its 'Honor' range of devices.
Tata Group-promoted Infiniti Retail has entered into a strategic partnership with e-commerce firm Snapdeal.com, where Croma, a part of Infiniti Retail, will open its brand store on Snapdeal's marketplace to bring in more customers.
Mobile handset manufacturer Celkon plans to set up its first manufacturing facility in India and is in talks with the Andhra Pradesh and Telangana governments for the same. "After the government recently resolved the reverse taxation issue, India has become an attractive place for manufacturing for players like us," as per Mr Murali Retineni, Executive Director, Celkon.
The Rs 40,600 crore (US$ 6.56 billion) Indian paint industry could enjoy 20 per cent CAGR until 2016, as per an industry study. This development will be driven by increasing demand from retail consumers, rapid urbanisation, and growth of rural markets. The industry will touch Rs 62,000 crore (US$ 10.02 billion) in the next two years, as per the study.
Mobile internet devices company Spice Mobility Ltd, a part of Spice Retail Ltd, plans to invest Rs 200 crore (US$ 32.34 million) in India in FY15 in a bid to increase its sales and distribution network in the country's smaller towns and cities.
Zomato has acquired Lunchtime.cz and Obedovat.sk, the popular restaurant guides of Czech Republic and Slovakia, respectively, for a combined amount of US$ 3.25 million, as per the company. This is its third acquisition and takes up Zomato's presence to 15 countries.
Finland-based smartphone company, Jolla, has entered into an agreement with Snapdeal.com to launch its handsets in India. "India is the rising smartphone market of the world and we look forward to welcoming many new Jolla fans across the country," as per Mr Sami Pienimäki, Co-founder and CMO, Jolla.
Finnish packaging major Huhtamaki has signed an agreement to buy Positive Packaging, known for producing packaging materials, for a transaction valued at US$ 336 million. "The transaction enhances our position in India and provides us with much improved access to the fast growing markets of Africa and Middle East," as per Mr Jukka Moisio, CEO, Huhtamaki Oyj.
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$ 16.17 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).
Measurement company Nielsen have 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 November 27, 2014
References: Media Reports, Press releases