India?s Consumption Rise: From GDP Growth to Economic Growth

India's consumer market is experiencing a significant growth phase, projected to reach an impressive $4 trillion by 20301. This expansion is attributed to a dynamic mix of elements, including a diverse and expanding consumer base, a youthful population, and a thriving service industry. The 'Make in India' initiative has further catalyzed this growth, attracting significant domestic and foreign investment and establishing numerous manufacturing hubs across the country. As household incomes rise, there's a marked shift in spending patterns, with a growing preference for luxury items and an overall increase in consumption beyond basic needs. This economic evolution reflects India's journey towards becoming a major player on the global stage, with its consumption market serving as a key driver of economic growth.

These figures are not mere statistics but reflections of our Bharat’s potential. Let's be active participants in shaping India's future.

India's Online Retail Boom: US$350 Billion Market by 2030, World's Third-Largest Consumer by 20252

The e-commerce sector@ is poised for explosive growth, with the market expected to reach a staggering US$350 billion in Gross Merchandise Value (GMV) by 2030. The rapid adoption of digital payments, exemplified by 7.8 billion daily e-commerce transactions in December 2022, is fueling this growth. Moreover, the number of online shoppers is projected to skyrocket from 150 million in 2020 to an impressive 500 million by 2030, underscoring the immense potential of this market. The Indian e-commerce industry is on track to surpass the US$350 billion mark by 2030, driven by a robust CAGR of 23%.

Quick Commerce: The Next Big Thing in Retail

Quick Commerce has witnessed explosive growth, surging by a staggering 230% between 2021 and 2023. This growth rate far eclipses that of food delivery, which expanded by a comparatively modest 24% during the same period.

FMCG Market on Fast Track: US$615 Billion by 20274

Expected to reach nearly US$615 billion by 2027, it's growing at a rapid 27.9% CAGR. While traditional giants like HUL and ITC dominate, a new wave of D2C startups is disrupting the industry. These upstarts are achieving milestones in record time, challenging the established order

India's Consumer Market Soars, Electronics Exports@ Up 25.8%, US$300B Target by FY265

The market for consumer durables in India is transitioning towards more structured entities, propelled by increasing incomes and consumer spending. The sector, encompassing electronics and appliances, is ripe for growth, fueled by technological advancements and increasing consumer awareness. With a 30% unorganized market share, there's ample opportunity for expansion. India's favorable demographics and electronics exports surge of 25.8% in April underscore its potential as a global consumer hub, aiming for US$300 billion in electronics manufacturing by FY26.

India's Travel Market@ Set to Double to US$125 Billion by FY276

India's travel sector is on a growth trajectory, poised to double in size to US$125 billion by FY27 from US$75 billion in FY20. This expansion is driven by factors such as increasing incomes and consumer spending, and a rising interest in both leisure and business travel. The country's allure is further enhanced by its world-class healthcare facilities and rich wellness offerings, attracting 21% of international visitors. With expected international tourist arrivals reaching 30.5 million by 2028 and a projected annual GDP growth of 7.1% for the travel and tourism sector over the next decade, India is establishing itself as a global tourism powerhouse.

India's digital economy@ is growing 2.8x of GDP7

India's digital economy is expanding at nearly three times the rate of its overall GDP growth and is projected to account for 20% of the nation's GDP by 2027. India government is prioritizing the establishment of significant AI computing infrastructure under the India AI Mission, with plans to support up to 50% of the costs for creating GPU infrastructure. Efforts are also being made to boost semiconductor capabilities domestically.

@This is one of the sectors in Consumption theme.

Conclusion

India's consumption market is on a meteoric rise, poised to become a global powerhouse, driven by a diverse consumer base, a young population, and swift digital integration, leading to a boost in spending across various sectors. From e-commerce to FMCG, travel to electronics, India's consumption story is being written with numbers that speak for themselves: a projected $4 trillion market by 2030, a booming e-commerce sector with millions of online shoppers, and rapid growth in various industries. This economic transformation is not just about numbers; it is about India's evolving identity as a major consumer market.

You can be a part of this consumption growth in India by investing in the Axis Consumption Fund. This fund aims to capitalize on the evolving consumption patterns and offers an opportunity to participate in the growth story of India’s dynamic market. By investing in this fund, you can align your financial goals with the broader economic trends shaping the future of consumption in India.

1:CEIC,Haver,UBS,Data as on June 2024.|*Source: https://www.business-standard.com/industry/news/consumer-spending-in-india-to-exceed-4-trillion-by-2030-says-report-123081000582_1.html
2: https://www.ibef.org/industry/indian-retail-industry-analysis-presentation#:~:text=Online%20retail%20market%20in%20India,billion)%20in%20consumption%20by%202025.

3: https://www.ibef.org/industry/fmcg#:~:text=total%20rural%20spending.-,Market%20Size,the%20overall%20annual%20FMCG%20sales.

4: https://www.ibef.org/industry/indian-consumer-market/infographic

5: https://www.ibef.org/industry/fmcg#:~:text=total%20rural%20spending.-,Market%20Size,the%20overall%20annual%20FMCG%20sales.

6: https://www.ibef.org/states/indian-tourism-and-hospitality-industry-analysis-presentation

7: https://www.ibef.org/news/india-s-digital-economy-is-growing-2-8x-of-gdp-union-minister-of-state-for-skill-development-entrepreneurship-and-electronics-it-mr-rajeev-chandrasekhar#:~:text=Rajeev%20Chandrasekhar%20announced%20that%20India's,the%20nation's%20GDP%20by%202027

Note: The Axis Consumption Fund NFO will launch on 23rd August to 6th September 2024

Sector(s) mentioned above are for the purpose of illustration only and should not be construed as a recommendation. The fund manager(s) may or may not choose to hold the sector mentioned above. Please refer detail Investment strategy of the scheme before investing.

This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

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Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.