India: From K- to F-shaped consumption growth

Recent trends in India show a "K-shaped" consumption pattern, with upper-income households experiencing significant growth while lower-income households lag behind. The government is actively working to enhance rural and youth consumption through initiatives aimed at increasing employment and labor productivity.

If successful, this could transition consumption growth to an "F-shaped" pattern, benefiting both upper- and lower-income segments evenly. Investment opportunities are emerging in the Indian banking, consumer discretionary, and industrial sectors, supported by individual case studies on HDFC Bank, notable for its market share and asset quality, and Zomato, a prominent food delivery and quick commerce platform.

The report also evaluates scenarios such as supply-side measures, public-private partnerships, labor participation, and potential tax cuts for middle-income earners, alongside the anticipated Production-Linked Incentive (PLI) 3.0 initiative set for 2026.