Indian consumption to hit Rs 335 lakh crore by 2028: Study

Chennai: The consumer market in India is expected to triple to Rs 335 lakh crore by 2028 and is expected to account for 62 per cent of the GDP, much ahead of average emerging market consumption of 50 per cent.  This will be driven by GDP growth, increasing affluence, urbanisation and faster growth of online and organised retail, finds a study.

The consumer market will be growing at a compounded annual growth rate of 12 per cent from Rs 110 lakh crore in 2018 to touch Rs 335 lakh crore in ten years. India’s consumption has been growing at a steady pace of 13 per cent over the last decade, accounting for 59.3 per cent share of GDP, finds the study by Retailers Association of India and Boston Consulting Group.

Going ahead, a GDP growth of 7.3 per cent between 2018 and 2023 and 6.2 per cent between 2023 and 2028 will fuel consumption growth.

One of the main drivers of the consumption story has been the increasing number of affluent and elite households. Affluent households have grown by 9 per cent over the past decade from 10.7 million to 24 million households. Among them, elite households grew by 13 per cent from 2.6 million to 9 million. Their consumption has grown by 20 per cent to account for one-third of the total private consumption.

“What was a want 10 years ago, has become a need today. These have been driven by three things--the change in demographics, increase in working population, rise in per capita income and globalisation leading to availability of choices,’ said Krish Iyer, CEO, Walmart India.

Though growth in consumption was recorded across all city tiers, Tier-I cities have registered an annual consumption growth of 16 per cent. Most of the key product segments and services have grown by more than 3.5 times in the past decade. Among them clothes and footwear grew by 4.6 times, of which clothes grew by a CAGR of 17 per cent and footwear by 14 per cent.  Healthcare services grew by 3.8 times in the past 10 years with a CAGR of 14 per cent.

Growth in the share of organised retail and online too has aided private consumption growth. Online has grown by a CAGR of 78 per cent, organized retail by 25 per cent and unorganised retail by 12 per cent. In the decade, number of online shoppers grew 26 times from 4-5 million to 120 million.

Another study by Deloitte found that India's retail market will grow from $795 billion in 2017 to $1.2 trillion in 2021 and $1.75 trillion in 2026. It finds that e-commerce will be the engine of the next level of Indian consumer growth.

According to Anil Talreja, Partner, Deloitte India the country continues to hold a strong position as far as its market potential is concerned and is on its way to becoming the third largest consumer market in the world after the US and China.