India’s consumption landscape is experiencing a significant shift. The traditional indicators of aspiration, such as consumer staples, two-wheelers, refrigerators, and domestic travel, are no longer driving growth as they once did. Instead, Indian consumers are increasingly allocating their spending towards experiences, digital services, premium goods, international travel, and investments.
This change is emphasised in Kotak Mutual Fund’s report, “The Great Consumption Shift,” which asserts that the composition of the country’s consumption basket has transformed markedly over the last decade.
Let’s take a closer look at the key consumption trends highlighted in Kotak Mutual Fund’s report, which reveals how Indian households are reshaping their spending priorities, with experiences, premium products, digital services, and investments increasingly commanding a larger share of the consumer wallet.
From aspirational goods to aspirational experiences
As per the Kotak Mutual Fund report, various traditional consumption sectors have experienced slower growth in recent years. Areas such as FMCG, air conditioners, refrigerators, hotels, and domestic tourism have either reached maturity or slowed growth. Conversely, spending in newer categories has surged dramatically. Revenue growth in digital platforms, OTT subscriptions, SIP inflows, upscale electronics, and e-commerce has greatly surpassed that of traditional consumption sectors.
The report highlights that consumers are increasingly prioritising experiences over tangible products. For example, India’s live events sector has seen rapid growth, with the count of ticketed live events increasing from approximately 19,000 in 2022 to 34,000 by 2025. This industry is valued at ₹20,861 crore and continues to expand robustly.
The rise of premium consumption
One of the clearest signs of changing consumption patterns is the growing preference for premium products.
Kotak Mutual Fund highlights that premium smartphones, priced above ₹30,000, now account for 26% of all phones sold in India, up from 20% in 2020. While overall smartphone volumes have remained largely flat, premium handset sales have continued to expand, indicating a shift toward higher-value purchases.
The report also points to Apple’s remarkable rise in India. Apple’s India revenue is projected to reach ₹1.43 lakh crore in FY26, more than double the revenue of Hindustan Unilever Ltd (HUL), despite serving a much smaller customer base. Apple’s India revenue has grown 6.2 times in five years, compared with HUL’s much slower growth trajectory.
A more unequal consumption landscape
The report indicates that consumption growth in India is increasingly concentrated among affluent households. The wealthiest 10% of urban consumers spend several times the national average on jewellery, education, dining, healthcare, and consumer goods. In many discretionary spending categories, expenditures are predominantly driven by the top income decile.
This disparity is reflected in income growth as well. According to Kotak Mutual Fund, income levels for wealthy urban households are estimated to increase by approximately 18% annually from FY20 to FY25, compared with around 6% for the broader urban mass market. Additionally, affluent rural households are experiencing faster growth than rural non-agricultural labour segments.
Rising costs are reshaping household budgets
While consumption patterns are evolving, household finances are facing increasing pressure. Urban rents have steadily risen as a share of household spending, while rental costs across major cities have surged over the past few years.
At the same time, household EMI burdens have often grown faster than income growth. According to the report, EMI obligations outpaced income growth in five of the past seven years, reducing the amount available for discretionary spending and savings.
The new indian wallet
The key conclusion from Kotak Mutual Fund’s research is that India’s wallet has shifted “from cereal to data to OTT to mobiles.” Consumers are increasingly prioritising connectivity, convenience, experiences, premium products, and global exposure. Foreign travel spending has risen 5.6 times over the past eight years, while overseas investments have also surged.
The great consumption reset is therefore not merely about spending more—it is about spending differently. As incomes become more concentrated and consumer preferences evolve, India’s next consumption cycle may be defined less by basic goods and more by experiences, digital platforms, premiumisation, and global aspirations.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
