India's consumption story remains resilient heading into the second half of FY27, with premiumisation, shifting consumer preferences and solid domestic demand expected to sustain momentum, according to a report released on Tuesday, 29 September 2026. The findings come as India's GDP expanded 7.8 per cent in Q1 FY27, exceeding the Reserve Bank of India's (RBI) own forecast of 7 per cent.

Consumption Holding Steady Despite Headwinds

Real private final consumption expenditure grew 7.1 per cent in Q1 FY27, marginally lower than the 7.5 per cent recorded in the previous quarter, according to the report by investment platform smallcase. Spending patterns, however, are increasingly tilting toward premium, branded and experience-led categories — a structural shift that analysts say points to a maturing consumer base rather than a demand slowdown.

Although equity markets have remained under pressure due to foreign portfolio investor (FPI) selling, strong domestic institutional inflows have provided a significant cushion, the report noted. This divergence between FPI outflows and domestic buying has helped prevent a sharper contraction in market sentiment.

The Premiumisation Trend Across Sectors

Premiumisation has emerged as one of the most prominent structural trends driving the consumption narrative. The share of SUVs and utility vehicles in total passenger vehicle sales has surged to 65 per cent, up from just 23 per cent in 2019. Similarly, smartphones priced above ₹30,000 now account for more than one-fifth of volumes and over half of total industry value.

Domestic air travel has crossed 16 crore passengers, while branded apparel continues to expand its footprint in smaller cities — a sign that aspirational spending is no longer confined to metros.

'India's consumption story remains healthy, but the mix is increasingly shifting towards premium, branded and experience-led spending,' said Aditya Agarwala, smallcase manager.

Health, Wellness and Green Mobility on the Rise

Beyond lifestyle goods, the report highlighted growing demand in health, wellness and digital consumption. India's nutraceutical market is projected to grow at an annual rate of approximately 10.5 per cent through 2030, while online beauty and fashion categories continue to record strong growth.

The green mobility shift is equally striking. Alternative-fuel vehicles accounted for 42 per cent of passenger vehicle retail sales in August, with electric two-wheelers exceeding a 10 per cent market share. Registrations of electric two-wheelers rose 65 per cent year-on-year during the month — a pace that outstrips most earlier projections for the segment.

Festive Season Expected to Provide Near-Term Boost

Looking ahead, the report expects the upcoming festive season to provide a near-term lift to spending, particularly in automobiles, organised retail, hospitality and financial services. This comes amid broad economic tailwinds: India remains the fastest-growing major economy, and domestic institutional investors appear committed to supporting market stability even as global uncertainty persists.

With GDP growth outpacing RBI forecasts and premiumisation deepening across categories, the structural consumption upgrade appears durable — though the pace of any festive-season rebound will be a key near-term test.