Key Takeaways
- India’s nominal GDP projected to grow 11% annually, reaching $7.3 trillion by FY30
- Premium FMCG products driving 42% of sector growth despite being 27% of sales
- Household savings expected to triple by 2035, fueling consumer confidence
- Tier 2 cities and rural India showing strongest growth in premium spending
India’s consumption landscape is undergoing a dramatic transformation as rising affluence reshapes shopping patterns. Franklin Templeton’s latest report reveals how premium products are now driving economic growth, with consumption expected to make up 60% of India’s expansion.
The Premiumisation Revolution in FMCG
Franklin Templeton defines premiumisation as consumers trading up within product categories. What was once simple detergent has evolved into advanced, eco-friendly variants with fragrance-lock technology – each commanding higher prices.
The data reveals a striking pattern: premium FMCG accounted for just 27% of total sales in FY24 but generated 42% of the sector’s growth. Specific categories showed even more dramatic shifts:
- Premium detergents grew at 26% annually versus 7% for mass variants
- Premium hair care advanced 16% against 7% for regular products
- Green tea expanded 25%, more than double regular tea’s 10% growth
The report highlights Hindustan Unilever, Dabur, Marico, and Britannia as companies successfully capitalizing on this trend through innovation and brand trust.
FMCG Leaders Riding the Affluence Wave
Hindustan Unilever saw its beauty and home-care lines driving growth, with premium innovations in skincare and wellness expanding its high-value portfolio.
Dabur grew through premium naturals and health supplements, with innovation contributing significantly to domestic revenue.
Marico benefited from consumers upgrading to value-added personal care products, while Britannia found new growth in premium cookies and baked snacks gaining traction in smaller cities.
Premium Appliances: Transforming Indian Homes
India’s appliances market, valued at $75 billion in 2024, is projected to reach $130-150 billion by 2029. Premium products already constitute nearly half the market and are expected to reach 60% by 2029.
With air-conditioner penetration at just 8% compared to 42% globally, categories like ACs, refrigerators, and washing machines have substantial growth potential. The shift is driven by rising incomes, health awareness, and easier access to EMIs.
The Wealth Effect: Savings Driving Spending
Household savings are projected to cross Rs 82 lakh crore by 2030 and reach Rs 1.32 lakh crore by 2035. The lower-middle class is catching up fast, with savings expected to triple to Rs 26 lakh crore by 2035.
Monthly SIP inflows reached Rs 29,361 crore in September 2025, indicating systematic investment habits. “The wealth effect from rising asset prices in equities, real estate and gold fuelled consumer confidence and discretionary spending,” the report noted.
Tier 2 and Rural India Embrace Premiumisation
Rural monthly per capita expenditure jumped from Rs 1,429 in 2012 to Rs 3,774 in 2023. The rural-urban spending gap narrowed to 70% in 2024 from 84% in 2012.
In housing, homes above Rs 1 crore constituted nearly half of residential sales in H1 2025, up from 15% in 2018. SUVs and premium two-wheelers similarly dominated their categories, showing aspiration has spread nationwide.
Investment Strategy and Risks
Franklin India Opportunities Fund maintains 30% exposure to the rising affluence theme, overweight on consumer discretionary, FMCG, and financial sectors.
The report identifies two key risks: employment quality and over-reliance on wealth effects. “A sharp correction in equities or gold could reverse this trend and slow discretionary spending,” Franklin Templeton cautioned.
Long-term Outlook
India’s growth story is increasingly written in homes rather than factories. As incomes rise and aspirations grow faster, companies that understand this shift will define the country’s next decade of economic expansion.
