From Villages to Luxury: India's Spending Shift

Consumption in India is experiencing a significant premiumization trend, with consumers upgrading across various sectors like homes, travel, and electronics, even extending into smaller towns and rural markets.

In the first half of 2026, homes priced above ₹1 crore constituted 54% of sales in eight major cities, a rise from the previous year. International air travel also saw robust growth, nearly tripling domestic traffic growth in FY26. Utility vehicles now account for 68% of passenger vehicle sales, and imports of Swiss watches surged by 37% in the first half of 2026.

The premiumization is evident in FMCG, with higher spending per trip for premium-oriented households. Beauty product sales in India show an unusual proportion of lower-priced items, yet global brands see opportunities at the high end due to increasing wealth creation and aspirations.

Finance Minister Nirmala Sitharaman has cautioned that growth could lose its structural durability if premiumization remains confined to urban consumers. She emphasized that broad-based consumption growth relies on working families across agriculture, rural construction, transport, and informal enterprises. The minister noted India is at a structural inflection point, with future consumption likely driven by rising income brackets and increased discretionary spending.

This upgrading trend is also apparent in appliances and smartphones, with a declining share for entry-level products. For instance, the market share of smartphones priced below ₹15,000 has fallen significantly from 45% in 2024 to 24% this year. Easier EMI financing and ecommerce expansion in smaller towns are facilitating access to higher-priced items.

Companies like AB InBev India are witnessing the emergence of premium demand in previously underdeveloped markets, with rural areas showing surprising growth in premium beer sales, indicating a widespread shift in consumer preferences across diverse demographics.