India has emerged as one of the fastest-growing economies in the world. With a population of 1.4 billion people, it appears to be a vast, lucrative market. However, according to the Indus Valley annual report 2025 by Bloom Research, nearly 1 billion people lack the disposable income required for discretionary spending.

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The report reveals a three-tier consumer economy in India

India1 (10% of population) – $15,000 per capita income, drives 66% of discretionary spending

India2 (23% of population) – $3,300 per capita income, contributes 33% of discretionary spending

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India3 (67% of population) – $1,000 per capita income, minimal discretionary spending

According to the report, India's top 10 per cent now controls 57.7 per cent of national income. Meanwhile, the bottom 50 per cent have witnessed a drastic income decline. This can be visible in the consumer trends. High-income groups continue to spend on luxury housing, premium smartphones, and branded goods. The experience economy is also booming, with concert tickets for global artists like Coldplay and Ed Sheeran selling out fast. 

The report highlights a steep decline in household savings as a major factor for this mass consumption slowdown. According to the RBI, personal debt is rising, while net financial savings are at a multi-year low. The recent crackdown on easy lending has put more pressure on consumption growth. 

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India vs China: Consumption gap

The report also compares the per capita consumption of India and China. While China is witnessing a broader economic slowdown, the gap between the 2 nations is drastic. India's average per-capita consumption in 2023 was $1493, almost where China was in 2010. This puts India 13 years behind China in terms of consumer spending power. 

The report also highlights the risks involved with Automation. The trend of lower spending and wage stagnation coincides with the rise in artificial intelligence disrupting white-collar jobs. This makes employment in services and manufacturing more uncertain. 

There is, however, a bright spot to consider. Rising rural demand the recent tax break announced in the budget could provide a slight boost to consumption.