India's internet economy set for accelerated growth: Redseer
India's consumption trends reflect increased prosperity driven by strong digital growth, with indicators showing signs of recovery across sectors.
India's consumption story remains resilient, buoyed by strong digital drivers. At the Ground Zero 8.0 - Bridge Over Troubled Waters business summit, Redseer Strategy Consultants offered insights into India's thriving internet landscape.
According to Redseer, India's GDP is projected to be at $6.5 trillion by 2030, with a retail market size of $2 trillion, and a per capita GDP of $4,300, indicative of a robust digital ecosystem. Despite experiencing a slowdown in the past two quarters, signs of recovery are emerging across various sectors, signalling a positive trajectory, Redseer said.
Mrigank Gutgutia, a partner at Redseer, emphasised that while the last two quarters presented challenges, India's private consumption is on the rise. In Q3-Q4 FY23, private consumption dipped to $2.2 trillion but is expected to surpass $2.4 trillion in Q4 FY24.
Key indicators such as credit card spending, air travel, and vehicle sales are showing signs of recovery in Q1 FY24. Mrigank identified "prosperity-driven categories" like travel, financial services, recreation, and insurance as experiencing accelerated growth, reflecting increased prosperity and evolving consumer behaviour towards higher categories.
The report also highlights several categories expected to witness long-term growth, including education, personal vehicles, personal care, food, and clothing. Premiumisation, brand proliferation, and digitisation are identified as core consumption themes cutting across sectors.
Despite past turbulence, India's internet economy is projected to maintain a steady 25% compound annual growth rate (CAGR) until the end of the decade.
Mrigank acknowledged the challenges that lie ahead in various sectors. Product-oriented consumer internet sectors faced recent growth headwinds but are anticipated to revive steadily, with most services except travel expected to regain normalised growth expectations.
One prominent challenge lies in the transacting user growth, particularly among categories such as fashion, beauty and personal care, e-grocery, e-retailing, and mobility. While the total number of internet transactors stands at approximately 350 million, the growth of mature online transactors who are frequent buyers has plateaued at around 40-45 million. Addressing concerns such as complex ordering processes, lack of trust, and enhancing offline offerings are crucial for expanding the user base and fostering high-frequency transactions, he said.
Edited by Affirunisa Kankudti