Consumer spending as an engine for Growth

India is currently the fastest growing large economy in the world, which is one of the reasons why projects with their roots in the subcontinent are at the heart of Red Ribbon’s Mainstream Impact Investment Strategies, just as they were when the company was founded more than a decade ago. But what are the key drivers of this explosive growth; what is it that makes India one of the most important Growth Markets in the world and what does all that mean for the future?

Well, for a start demographic trends and the resulting rapid shifts in consumer demand patterns are undoubtedly contributing to the phenomenon.

India has the fastest growing population in the world; increasingly urbanised and sophisticated in its tastes and with burgeoning disposable income levels to match. The resulting escalation in demand is being targeted in particular on social media and technology sectors where according to the Government sponsored India Brand Equity Foundation, spending is projected to double by 2025.

And bear in mind also that these trends are by no means coming off a cold start. By the end of 2016, India had already hit a ten-year high in consumer spending, standing first in a group of sixty-three leading nations surveyed in the Global Consumer Confidence Index. Seventy percent of respondents on the subcontinent responded to this survey by saying that the next twelve months would be a good time for them to buy consumer goods.

The Indian Consumer Sector grew at an annual rate of 5.7% between 2005 and 2015. Compare that with the 12% year on year growth it is experiencing now: and if things continue at the current rate, India will be the third largest consumer market in the world by 2025. By way of only one example, smartphone sales in India are projected to grow by 15% (to 125 Million) during the course of 2017 alone.

Major multinationals have not been slow to spot the trend:

• Amazon India has set up seven new warehouses this year, which will exclusively provide logistical support for its campaign to boost sales of high-end consumer products and the global behemoth is also planning to enter the Indian food retailing sector by investing US$ 515 million over the next five years;

• Dyson, the UK-based manufacturer, has plans to enter the Indian consumer market during 2017 and is investing GBP 154 million (US$ 190 million) over the next five years in retail infrastructure.

Prime Minister Modi’s Government is also playing a part in these trends through a policy of 100% Foreign Direct Investment (FDI) relief for online retail goods and services  There is no sign that the pace of change in the consumer sector is likely to slow down anytime soon.

Red Ribbon Asset Management has long recognized the importance of India as the single most significant Growth Market in the World. The subcontinent sits at the very heart of its investment policies, combining above market rate returns for its investors whilst at the same time offering unique opportunities to further the company’s innovative Mainstream Impact Investment Strategies.

Read about the India Brand Equity Foundation here: https://www.ibef.org/

Read about the Global Consumer Confidence Index here: https://data.oecd.org/leadind/consumer-confidence-index-cci.htm

Read the details of India’s FDI Scheme here: dipp.nic.in/foreign-direct-investment/foreign-direct-investment-policy