Consumer Goods

India's consumer confidence continues to remain highest globally and showed improvement in the fourth quarter of calendar year 2014 (Q4), riding on positive economic environment and lower inflation. Findings reveal that the consumer confidence of urban India increased by three points in Q4 from the preceding quarter. With a score of 129 in Q4, urban India's consumer confidence is up by 14 points from the corresponding period of the previous year (Q4 of 2013) when it stood at 115. The current score helps India stay on top of the global consumer confidence index for the quarter and is followed by Indonesia and Philippines, each of which have a score of 120.

India's market is consumer driven, with spending anticipated to more than double by 2025. The Indian consumer segment is broadly segregated into urban and rural markets, and is attracting marketers from across the world.

Global corporations view India as a vital market for the future. India has a young demographic and a middle class with rising disposable income. 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 a leading industry body and bank has stated that the consumer spending in India is expected to quadruple to US$ 4.2 trillion by 2017.

A study states that 'Smartphone forecasts and assumptions, 2007-2020' India ranks fourth in the top 10 global smart phones markets. The country had 111 million smart phone connections in the April-June quarter of 2014, behind leader China, US and Brazil and this would lead to India becoming the world's largest middle class consumer market with a total consumer spend of nearly US$ 13 trillion by 2030.

On the back of better incomes and increasing affordability, the consumer durables market is anticipated to expand at a compound annual growth rate (CAGR) of 14.8 per cent to US$ 12.5 billion in FY15 from US$ 7.3 billion in FY12.

Online retailing, both direct and through marketplaces, will grow threefold to become an Rs 50,000 crores (US$ 8.06 billion) industry by 2016

Current foreign Investments

Following are some of the major investments and developments in the Indian consumer market sector.

  • Emami, the flagship company of the Rs 10,000 crores (US$ 1.61 billion) Emami Group, has acquired a controlling 66.67 per cent stake in Fravin of Australia along with its three subsidiaries. Emami International FZE, a subsidiary of Emami, was the special purpose vehicle for this first global acquisition by the group. This international acquisition marks Emami's entry into the fast growing natural and organic personal care segment and is in line with the company's strategy to be present in sectors with high-growth potential.
  • Custo Barcelona, the Spanish apparel brand of Custo Dalmau, has entered India. The brand has started its operations with two stores, in Delhi and Mumbai, and will then expand over a period. Its sale will be limited to exclusive outlets, and there will be no multi-brand retailing.

Government Initiatives and Future Plans

The Government of India has also played a major role in the growth of this segment. It has enacted policies that have attracted foreign direct investment (FDI) and as a result boosted economic growth.

  • The Government of India has allowed 100 per cent FDI in the electronics hardware-manufacturing sector through the automatic route. It has also enabled 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail to attract more foreign investment into the country.
  • Hyderabad will soon have an Rs 100 crores (US$ 16.12 million) National Institute for Footwear Design and Development. The Government of Andhra Pradesh has set aside the required land at Gachibowli in Cyberabad. Funds for the center have been sanctioned by the Ministry of Commerce, India.
  • With the demand for skilled labour growing among Indian industries, the government plans to train 500 million people by 2022, and is encouraging private players and entrepreneurs to invest in the venture. Many government, corporate, and educational organisations are putting in the effort to train, educate and produce skilled workers.
  • The rural India's FMCG market will go past the US$ 100 billion mark by 2025. Online portals are expected to play a key role for companies trying to break into the hinterlands. The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a company's reach.
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