How Rising Household Incomes Are Powering India’s Consumption Wave

Over the past few years, something notable has been happening across Indian households. People are not only earning more, but they are also making more discretionary spending choices. From smartphones and fashion to holidays and healthier foods, Indians are upgrading their lifestyles in many ways. This is shaping the country’s consumption story.

Let’s explore how rising incomes are changing the way people spend, and why this is an important trend to watch for an investor.

• Table of contents

• People are earning more and spending more
• Families are buying better quality products
• Consumption is spreading beyond big cities
• People are spending more on experiences and lifestyle
• The future looks bright for India’s consumption story

People are earning more and spending more

In recent years, household incomes have been rising steadily. As people earn more, they naturally want to spend more on things that make life better and more comfortable. This shift is clearly visible in the way people now shop, travel, and live.

According to a joint report by the World Economic Forum and Bain & Company, India is projected to become the world’s third-largest consumer market by 2030. This is mainly because of rising incomes and a growing middle class.

Families are buying better quality products

Increasingly, Indian families with higher disposable incomes are choosing branded goods over local or unbranded ones. There is a strong rise in demand for durable products like smartphones, home appliances, and even cars. Many are switching from basic items to premium ones, such as moving from instant coffee to brewed coffee, or from local soaps to skincare brands. This move from “more” to “better” is helping many companies grow. Sectors like personal care, electronics, and home improvement are seeing increasing demand.

Also Read: What is megatrend investing?

Consumption is spreading beyond big cities

Another interesting change is that higher spending is no longer limited to big cities. Smaller towns and villages are also participating in this consumption story.

• Access to the internet and smartphones has brought new products and services to smaller towns.
• Online shopping has made it easy for people to buy anything, no matter where they live.
• Social media is playing a big role in influencing buying behaviour, even in tier 2 and tier 3 cities.

According to a BCG report, smaller cities in India are expected to play a major role in driving consumption growth, with emerging cities showing faster growth rates than major metros. This trend is prompting many companies to focus more on regional markets and tailor offerings accordingly.

People are spending more on experiences and lifestyle

Rising incomes are changing what people buy, which in turn is changing how people live. A large number of people are now spending on experiences that bring joy and comfort.

• There is a growing interest in travel, both within the country and abroad.
• Dining out, going to the cinema, and spending on leisure activities are now more common.
• Health and fitness are also becoming a big focus; people are joining gyms, buying fitness gear, or signing up for yoga classes.

These lifestyle changes are opening up new business opportunities in sectors like tourism, wellness, entertainment, and food services. A report by Bain & Company found that Indian consumers are increasingly spending more on “value-added” services and lifestyle products. This shift is helping the economy move from basic needs to aspirational spending.

The future looks bright for India’s consumption story

With a young population, a rising number of dual-income households, and improving financial awareness, the trend of higher spending is expected to continue.

Here are some indicators that support this trend:

• A chunk of India’s population is below the age of 35, and young consumers tend to spend more freely.
• More women are joining the workforce, adding to household income.
• Awareness about brands, quality, and wellness is increasing fast.
• Financial tools like EMIs and digital wallets are making it easier to transact.

All of these factors together suggest a gradual shift from a "save-first" mindset to more selective and lifestyle-focused spending.

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Conclusion

Rising income levels are changing how Indian families live, shop, and enjoy life. They are no longer just buying for need. Instead, they are buying for comfort, quality, and joy. For businesses and investors, this can open up newer avenues.

growing appetite for better living makes it a market with potential. The spending patterns of the people in India tell a story of growth, change, and potential opportunity.

At Bajaj Finserv Asset Management Ltd, we aim to harness the power of megatrends by offering investors access to themes shaping the world’s future — from clean energy to technology, innovation, demographic shifts and more. Many of our funds follow a megatrends investment approach to help you participate in these long-term shifts, with a focus on growth potential and diversification. Build your future-focussed portfolio with Bajaj Finserv AMC.