India on track to become third largest consumer market by 2026: UBS
India is on track to become the third largest consumer market in 2026, overtaking Germany and Japan, as people in the affluent category increase, UBS said in its latest report released Monday.
“As of 2023, there were an estimated 40 million people in India (4% share in the population of 15 years and above) in the affluent category (annual income above $10,000), and these will likely more than double in the next 5 years,” UBS said, highlighting 88 million people with over $10,000 annual income by 2028.
The investment bank noted that consumption growth will likely remain muted at 4-5% in the current and next fiscal and below the 6.5-7% average annual growth witnessed during FY11 and FY20.
“While urban mass-market demand should remain modest on softening corporate wage growth, moderating personal loan growth (ex-housing due to tighter risk weights) and the lagged impact of monetary tightening, we expect the premium/ affluent segment to continue to do well,” it said.
The rural segment is expected to witness some recovery as the country experiences normal monsoon, UBS said, also noting that the removal of export bans on agricultural commodities and capex recovery could also help rural recovery.
The government lifted the ban on onion exports last week, with certain conditions.
Experts indicate that inflation has also been a factor constraining real wage growth. Reserve Bank of India estimates inflation to ease to 4.5% in FY25 from 5.4% average in the previous fiscal.
The resilient domestic market was sighted by UBS
