India’s consumption story stays uneven as confidence rises but spending remains cautious

India’s consumption narrative is ending the year on a mixed note. While consumer confidence remains among the strongest globally and premium categories continue to see selective demand, the broader recovery in mass consumption is proving slower and more uneven than hoped.

Festival-led optimism briefly lifted sales in October, but the momentum did not sustain into November and December, raising questions around the pace of recovery going into FY26.

Data from Elara Securities shows that same-store sales growth (SSSG) for discretionary categories rose marginally by 1–2% year-on-year in October, only to slip into a 1–4% decline over the next two months. “Festival season-led SSSG uptick in October faded in November-December, implying no material recovery,” said Karan Taurani, executive vice president at Elara Securities. With consumption trends subdued through the first nine months of FY26, Taurani added that the implied Q4 growth expectation of around 5.3% year-on-year “appears steep” and could lead to a 2.4% cut in FY26 revenue estimates.

Premiumisation holds, volumes under pressure

While overall consumption remains patchy, premiumisation continues to be a clear undercurrent, especially in urban discretionary spending. A report by Croma highlights a sharp shift in consumer behaviour toward higher-value purchases. One in three smartphones sold fell in the ₹20,000–30,000 price band, while nearly one in five devices was a flagship or super-flagship model. Breakout price segments such as ₹50,000–58,000 recorded over 300% growth year-on-year, reflecting aspirational upgrades rather than pure replacement buying.

The trend extends beyond smartphones. The laptop market posted strong double-digit growth, with gaming laptops alone seeing a surge of over 25%. In appliances, 32% of all air conditioners sold were Smart ACs, while demand for all-season ACs that double up as heaters is rising in North India, driven by energy efficiency benefits of nearly 40% compared to conventional room heaters.

“Consumers today are confident, informed and willing to invest in technology that delivers tangible everyday value,” said a spokesperson at Infiniti Retail Ltd, which operates Croma. “Choices are increasingly driven by experience, relevance and long-term utility.”

In kitchens and home appliances, lifestyle-led consumption is becoming more pronounced. Smart, IoT-enabled and energy-efficient appliances are gaining acceptance as consumers increasingly expect convenience and performance as standard. In fact, smart and energy-efficient products are increasingly replacing entry-level purchases. “Consumers today are upgrading with a stronger focus on design, hygiene and long-term value rather than basic functionality,” said Nirupam Sahay, CEO, Hindware Limited.

Confidence strong, spending selective

Consumer sentiment, however, remains a bright spot. According to BCG’s latest Global Consumer Radar report, 61% of Indian consumers expect “continuous good times”, making India one of the most optimistic markets globally. Only 17% of Indian consumers believe global geopolitical tensions could slow the country’s growth, the second-lowest after China. Reflecting this confidence, 60% of consumers expect their household spending to increase over the next six months, up from 50% in September 2024.

Yet, confidence has not translated into broad-based volume growth. In value-driven categories such as fashion, demand has slowed noticeably. “Consumption is growing, but at a slower pace. Like-for-like growth has been slowing for the last 12–18 months,” said Govind Shrikhande, former managing director of Shoppers Stop. He noted that while GST 2.0 has effectively acted as a price discount, it has not delivered the kind of volume jump the industry expected.

Outlook

Looking ahead, companies remain cautiously optimistic. Sahay said recent months have seen improvement in bathroom fittings, driven by renovation and replacement cycles. “Premium fixtures, luxurious surfaces and self-cleaning technologies will drive growth in bathrooms, while connected and design-led kitchen appliances will see strong momentum,” he said, adding that Tier 1 and Tier 2 cities, backed by housing activity and rising aspirations, will drive demand into 2026.

FMCG players are pinning hopes on rural India. Dabur India CEO Mohit Malhotra said the rollout of GST 2.0, “this year’s biggest structural milestone”, has brought meaningful efficiency gains across the value chain. 

More importantly, demand is showing signs of a gradual pickup. “We are beginning to witness a steady improvement in demand, with a clear and progressive uptick led by rural resurgence,” Malhotra said, citing better farm incomes, improved liquidity and deeper distribution penetration.

He believes India’s consumption outlook will be shaped by four long-term drivers: rising affluence, rural demand, a strong demographic dividend and technological advancement. While premiumisation is more visible in urban and online channels, rural consumption is expected to provide volume-led support going forward.