Rising incomes for India's Millennials offer unprecedented opportunities for consumer industries, such as autos, telecom, finance and real estate.
India is on track to become the youngest country in the world by 2020, with a median age of 29, highlighting the outsized role of it millennial generation in spurring growth.
The country's more than 400 million Millennials—those born after 1982—account for a third of India's population and 46% of its workforce. They may be young, but they're already the chief wage earners in most households, with millennial income contributing to 70% of total household income, according to a new report from Morgan Stanley Research.
This tidal wave of youth is unsurprisingly driving an economic transformation. And Morgan Stanley researchers contend that this generation's consumer preferences will underpin growth of four key industries for years to come based on the results of its proprietary AlphaWise survey of urban, middle-class Millennials.
Bikes and scooters remain the most common mode of transportation in the world's second most populated country. However, a shift that benefits automakers may be underway. While only 7% of Indian Millennials in the AlphaWise survey own a passenger vehicle, “Car penetration in India tends to rise as incomes expand,” says Binay Singh, who covers India’s auto industry. He also notes that, while the number of users of app-based taxi services is growing, most Millennials surveyed still say that they prefer to own at least one car. Singh believes that such auto-ownership aspirations will lead to a “multiyear upcycle” for auto sales in India.
While a car may be in the near future for many Indian Millennials, purchasing a home remains a longer-term goal. Millennials have yet to hit their prime home-buying years. In India, most property owners are between the ages of 34 and 55. However, Indian Millennials in higher income brackets are planning to buy homes, as their incomes rise. In fact, 7% of those surveyed report that they aim to invest in property in the medium term—ahead of spending money on travel and buying a car, according to the survey results.
Millennials are leading India’s smartphone revolution, with an astounding 84% of them already reliant on mobile broadband, the research shows, spending an average of 17 hours a week online. So data speed is important—and they're willing to switch providers to get it, according to the Morgan Stanley report. This need for speed threatens to disrupt the country's telecom industry, which is still ramping up its infrastructure to meet growing demand. Operators that can offer faster data at cheaper prices have an unprecedented opportunity for growth.
New scooters. New cars. New furniture for new houses. As the income and discretionary spending of these Millennials rises over the next decade, so too will their need for financing and retail credit products. Forward-thinking lenders are already staking their claim on this next generation of borrowers, with products aimed at financing everything from dental care and laser-eye treatments to the latest smart phones.
In India, Millennials will certainly make an economic mark, and investors and industry players who are ready to meet their needs—and offer them more—stand to benefit.