Diwali: All hail the great Indian consumer; foreign buyers could soon light up sales in…



Diwali is as a good time as any to celebrate one particular species of humankind: the Indian consumer.

Or, should we say, the Great Indian Consumer.

This conspicuous member high up in the picking and pecking order of supply-demand capitalism has proved to be remarkably resilient, pushing the economy out of its pandemic trough and setting it on a course for an investment boom.

Diwali sales of SUVs and luxury apartments are poised to set new records as banks push more money into the hands of buyers.

It is, however, not all credit driven, with incomes among the top one-fifth of consumers rising faster in agriculture and the informal sectors. India’s middle class – middle classes, really – is taking shape in its countryside, which makes sustainable growth harder to come by.

The country would need to move the next one-fifth of its consumers into the middle class to trigger producer responses that rely on value sensitivity in buying decisions, rather than on price sensitivity.One way to go about this would be to corral within the country production of most things Indians buy today. Consumers, then, would have to pay more, affecting the transition of the price-sensitive segment. The other option would be to let Indian manufacturers compete in a globalised environment, which could wean them off their overdependence on domestic consumption. The size of the Indian market acts as a perverse incentive against exports and the rate of its expansion sets an outer limit on industrial growth.

GoI has set its sights on the foreign buyer in response to the inverted consumption pyramid and to create sustainable pathways for the middle class in the making. But the mindset of manufacturing for India, and then for the world, does not suffice. Goods will have to be made for the world, and India too. It’s still early days, and global manufacturers such as Apple are driving the transformation. Domestic industry, too, is drawing its cue with the Tatas entering contract manufacturing for iPhones. Foreign buyers could be lighting up Diwali sales in future.



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