According to an article in the WSJ, India may finally become "the next big market" in 2006 thanks to the Indian consumer. Highlights of the article:
- Deep pocketed computer programmers are increasing the size of the middle class and driving the consumer boom.
- Many younger Indians are more confident than their parents about the country's economic direction and are more willing to buy expensive foreign brands.
- Unlike consumers in China, Indians appear more inclined to spend than save.
- Average annual income is around $620 so Indians remain somewhat constrained in what they can buy even if purchasing power is growing quickly.
- India currently has about 90 million people that belong to the country's middle class. Earnings range between $4,500 and $22,000, according to the National Council for Applied Economic Research. The think tank classifies an additional 287 million people as "aspirers," or those that hope to join the middle class.
- Auto sales climbed 18% in the year ended March 31, 2005.
- Production of microwave ovens jumped 27% amid surging demand for kitchen conveniences.
- India is adding more than two million new mobile-phone subscribers every month.
Foreign Companies in India
- Despite bright prospects many foreign companies are still struggling to connect with the Indian consumer.
- Wal-Mart (ticker: WMT) and Carrefour SA, have been prevented from investing in and operating their own stores.
- Many foreign brands have entered India through franchise agreements, which require companies to cede a lot of control to local operators. (Indian officials say they are studying proposals of how to open the retail sector to foreign investment without putting many of the million or so mom-and-pop shops out of business.)
- Sectors that authorities have opened are telecommunications and banking.
- Pepsi (ticker: PEP) is gaining traction.
Full article here (sub req).