India is one of the fastest growing economies in the world. After a slow gradual process of opening its markets to foreign competition, India is beginning to grow. With MNCs (multinational corporations) opening an increasing number of offices to outsource work, India’s youth now have opportunities their parents never had. These young people, along with their parents, drive the Indian economy by buying foreign brands and spending on other luxury items.
Many of these young people are in their twenties and still alive. They have few or no bills to pay and, in most cases, spend 60-70% of their income on purchases (Source Wall Street Journal, Wallets crack open in India, January 3, 2006). Most of these young people are working for call centers or other technology companies, and increasingly living a more Western consumer lifestyle.
India currently has around 17 million households or 90 million people who belong to the country’s middle class, earning between $4,500 and $22,000 according to the National Council for Applied Economic Research. The same organization has classified an additional 287 million people as “wannabes,” those hoping to join the middle class. These applicants earn between $2,000 and $4,000. By the year 2010 these individuals are forecast to join the ranks of the middle class to total 561 million according to the economic council.
Despite the bright prospects, many foreign companies are still struggling to enter the Indian market. Stores like Wall-Mart have been prevented from investing in running their own stores in India. Many of the foreign brands have now entered India through franchise deals, which require companies to cede much control to local operators.
Whatever the case, the Indian economy is growing in size at a rapid rate, and the year 2006 will bring new consumers to the market at an increasing rate. The challenge most companies face is how to sell products to brand conscious consumers at a price they can afford and how to keep up with the growth rate which in most cases is around 30%. to 50% per year compared to 3% to 5% per year. average in the developed world.
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