Will India Become the 3rd Largest Consumer Market by 2026?
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Synopsis
Discover how India is poised to become one of the world's largest consumer markets by 2026. With a surge in household consumption and strong GDP growth, the nation is on a remarkable economic path. Find out the key factors driving this transformation in our latest analysis.
Key Takeaways
- India's household consumption is expected to reach $2.4 trillion by 2024.
- Projected GDP growth rates of 6.4% in FY27 and 6.5% in FY28.
- India will likely be the fastest-growing economy in the APAC region by 2027.
- Potential risks include trade tariffs from the US and policy responses from India.
- RBI expected to cut rates to spur growth further.
New Delhi, Nov 11 (NationPress) At its present growth trajectory, India is set to become the world's third-largest consumer market by 2026 and the third-largest economy by 2028, following only the US and China, according to a UBS report.
According to the report, India's household consumption has nearly doubled over the last decade, reaching $2.4 trillion in 2024, with a remarkable 7.9 percent CAGR, surpassing growth rates of China, the US, and Germany. The projections suggest that India's consumer market will achieve this milestone well before its GDP, which is estimated to reach third place by 2028.
Furthermore, India's real GDP growth is projected to stabilize at 6.4 percent year-on-year in FY27 and 6.5 percent in FY28, driven by strong domestic demand and supportive policies. This would make India the fastest-growing economy in the Asia Pacific (APAC) region in 2027, ahead of the Philippines and Indonesia, as noted in the report.
The report also anticipates a slowdown in GDP growth for the US, from 1.9 percent in 2025 to 1.7 percent in 2026, before recovering to 1.9 percent in 2027. In China, real GDP growth is expected to decline to 4.5 percent in 2026, down from 4.9 percent in 2025, largely due to challenges in exports.
However, UBS warns that India's growth forecast carries downside risks, particularly concerning US trade policies and India's responses to them.
Firstly, if the Donald Trump administration's 50 percent trade tariff remains in effect, it could reduce growth by approximately 50 basis points in FY27, negatively impacting employment, consumption, and business confidence, which could further deter investment.
Secondly, a 25 percent tax on payments made to foreign outsourcing services by US companies could potentially decrease India's growth by about 90 basis points in FY27, as stated in the report.
UBS also forecasts that the Reserve Bank of India (RBI) may cut rates by an additional 25 basis points to foster growth in the current financial year ending March 31, 2026.
Point of View
I believe that India's potential to become a leading consumer market highlights the nation's resilience and adaptability in the face of global challenges. This growth story is not just about numbers; it's about the aspirations of millions of Indians. We must remain vigilant about the potential risks while celebrating this remarkable journey.
NationPress
11/11/2025
Frequently Asked Questions
What factors contribute to India's consumer market growth?
India's growth in household consumption, favorable policies, and strong domestic demand are key contributors to the expansion of its consumer market.
How does India's GDP growth compare to other countries?
India's GDP growth is projected to be higher than that of the US and China, making it the fastest-growing economy in the Asia Pacific region.
What risks could affect India's economic growth?
Uncertainties related to US trade policies and potential tariffs could pose risks to India's growth forecast.
