India to become the third largest consumer market – The changing dynamics of the Indian consumer industry

Last Updated at: Feb 08, 2021
The changing dynamics of the Indian consumer industry

“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer”.

– Adam Smith

The World Economic Forum sprang a happy surprise with its prediction that the Indian economy will become the third largest in the world by the year 2030, only behind the US and China. This is also a good leap from India’s current position as the sixth fastest growing economy.

With reforms like GST aimed at synthesising India’s fiscal and taxation norms with its international competitors, reduction in corporate tax rates and stricter enforcement and restructuring measures for the problem of Non Performing Assets, our economic and political landscape was richly dotted in the last year with reforms that promise huge gains to business owners, consequently the government (through taxes) and ultimately the consumers. This post is a concise account of what factors have led to the growth of the Indian consumer industry and what dynamics could possibly fuel India’s growth story in this segment, in the years to come.

Get Your Business Registered

Achieving Growth in Agriculture and Allied Sectors: One of the major inputs for all consumer-centric industries spanning across segments like basic materials, fast-moving consumer goods, cosmetics etc, come from strong backing of the agro-sector as it feeds several other industries. Since agriculture is seasonal and volatile, dependent on variables like rainfall, soil and the availability of credit, manufacturing and service sectors cannot thrive unless we achieve growth in the agriculture sector.

Encouraging Independence in Diverse Areas: While we may have come a long way from the era of severe licensing, permits and Quota Raj that dominated the last century, the recent relaxation of licensing requirement for small manufacturers of spare parts of critical defence equipment show that progress can be made only by giving greater freedom and independence from political and administrative control. With the divestment of the government’s stake in traditionally dominated areas like aviation and power generation, we are slowly moving to a more liberalised regime that is likely to power entrepreneurship in diverse consumer segments.

Strategic Growth in Export Segments: India’s geophysical position and climatic factors make it ideally suited for a large industrial base of gemstones, precious metals and mineral oils that constitute almost one-fourth of our total exports. Our trained human resource base in technology, hardware and service related sectors, adds heavily to the inflow of funds. These makeup significant contributions to our National Income and GDP growth. In the backdrop of a possible trade war between the USA and China, India is also increasingly being eyed by large players relocating factories and service centres. What adds to investor confidence is also the improvement in our Ease of Doing Business Rankings and the political machinery committed to international collaborations.

Exploring Hens that may lay Golden Eggs – With technology being increasingly leveraged by upcoming startups as well as traditional businesses, there is no denying that for a nation to continue to attract investment, we need new partnerships and exploration of opportunities in budding sectors like Artificial Intelligence, big data, food processing, aeronautics, renewable energy and tourism. With the renewed focus of the world on cleaner energy, alternatives to making healthier food and tourism on the rise, India is also strategically positioned to reap gains from these segments, considering its demographic divided that includes a significantly large base of young population.

Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.