India is poised to become the third-largest consumer market behind only the US and China; and consumer spending in India is expected to grow from $1.5 trillion at present to nearly $6 trillion by 2030, a World Economic Forum report said Wednesday.
According to the World Economic Forum (WEF), with an annual GDP growth rate of 7.5 per cent, India is currently the world's sixth-largest economy. By 2030, domestic private consumption, which accounts for 60 per cent of the country's GDP, is expected to develop into a $6-trillion growth opportunity.
"If realised, this would make India's consumer market the third-largest in the world, behind the US and China," the report said.
Commenting on the report, Zara Ingilizian, Head of Consumer Industries and Member of Executive Committee, World Economic Forum, said "as India continues its path as one of the world's most dynamic consumption environments, private and public-sector leaders will have to take shared accountability to ensure such consumption is inclusive and responsible.
Notwithstanding the significant growth in consumption, critical societal challenges will need to be addressed, including skills development and employment of the future workforce, socio-economic inclusion of rural India, and creating a healthy and sustainable future for its citizens.
The report titled 'Future of Consumption in Fast-Growth Consumer Market India' noted that growth of the middle class will lift nearly 25 million households out of poverty.
According to the report, growth in income will transform India from a "bottom of the pyramid economy" to a middle class-led one.
Future consumption growth will mainly come from rich and densely populated cities and the thousands of developed rural towns.
"India's top 40 cities will form a $1.5 trillion opportunity by 2030, many thousands of small urban towns will also drive an equally large spend in aggregate. In parallel, there will be an opportunity to unlock nearly USD 1.2 trillion of spend in developed rural areas by improving infrastructure and providing access to organised and online retail," WEF noted.
The report produced in collaboration with Bain & Company builds on consumer surveys conducted across 5,100 households in 30 cities and towns in India, and draws from more than 40 interviews with private and public-sector leaders.
"It's an exciting future for firms that wish to unlock the consumption opportunity in India," as stated by Nikhil Prasad Ojha, Partner and Leader of the Strategy practice at Bain India.
To unlock the potential of these opportunities and to ensure equitable growth, the report identified three critical societal challenges that need to be addressed -- skills development and employment for the future workforce, socio-economic inclusion of rural India and healthy and sustainable future.