Consumer Spending In India To Grow To $4.2 Trillion By 2017

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 both industry body ASSOCHAM and Yes Bank stated that the consumer spending in India is expected to quadruple to $4.2 trillion by 2017.

The social media has helped companies to create greater brand awareness amongst Indian consumers especially in the tier 1 and 2 cities. This has been further fueled by the growing Internet penetration across these cities coupled with higher disposable income.

This is especially true in the case of luxury market, which is expected to grow to $18 billion from $14 bilion in the next two years. The categories that have witnessed rapid growth in the Indian luxury market include fashion, automobiles and fine dining.

“Indian luxury market is poised to expand three-fold in next three years and the number of millionaires expected to multiply three times in another five years”, said DS Rawat, general secretary of ASSOCHAM.

The study has revealed that the luxury market in the country is estimated to grow as both brands and the consumers have various options to explore in product and service categories such as apparel and accessories, pens, home décor, watches, wines & spirits & jewelry, spas, concierge service, travel & tourism, fine dining and hotels.

“With the luxury market expected to grow at over 20% year on year, the private equity investments in the luxury segment are expected to increase and support the enhanced size of the Indian luxury market,” added Rawat.

Commenting on the issue, an industry player told BI India that the increasing penetration of eCommerce companies in tier 1 and 2 cities has also impacted the dynamics of the luxury market. “We see a lot of the luxury brands being available on these websites across product categories. eCommerce have made luxury brands more accessible and is catering to the aspirational value of the consumers in these markets”, he noted. Experts have suggested that online transactions shall lead to approx. 80 million transactions on the Internet by 2020.

According to the study, India will also witness rapid growth in the number of Ultra High Net (UHN), who will have a minimum net worth of Rs 25 crore in the country. The number of UHN is expected to triple to 5 lakhs in next five years while their net worth is expected to increase by five-folds to Rs 260 trillion. Similarly, HNIs are expected to grow twice their current number (over 2 lakh) by 2015 to over 4 lakhs with a collective worth of $2,645 billion.

“These projections along with the increasing price parity in the luxury products with other international destinations like Singapore or Hong Kong, and customized products offerings would indicate that the luxury market in India would evolve quickly,” stated the report.

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