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BOOM OR BOMB: INDIAS DEMOGRAPHICS AND

MARKET IMPACT
September 2016

INTRODUCTION
HARNESSING INDIAS DEMOGRAPHIC
DIVIDEND
URBANISATION
AGEING
HEALTH MATTERS

CONCLUSION

INTRODUCTION

Scope
Overview of Indias Key Demographic Trends:

Strong population
growth

Swelling workingage population

Ageing

Euromonitor International

Disclaimer

Urbanisation

Rising health risks

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

Much of the information in this


briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader
discretion is advised.
India is set to overtake
China to become the worlds
most populous nation in 2025.
Strong population growth,
combined with rising incomes
and urbanisation, makes India a
consumer market with immense
potential. It is also a competitive
production hub thanks to a
large, growing and low-cost
labour force. However, India
also faces important challenges,
including the need to develop
urban infrastructure, create jobs
and provide skills training to its
workforce and tackle soaring
health problems.

PASSPORT 3

INTRODUCTION

Key findings
India matters

India is home to nearly a fifth of the global population. It also has the worlds
sixth largest consumer market by total expenditure, which is set to expand
thanks to a growing middle class with rising incomes. Population dynamics
such as increasing working-age population, urbanisation, ageing and soaring
health problems are creating many opportunities and challenges in India.

Harnessing Indias
demographic dividend

The share of working-age population in Indias total population is growing, thus


giving a boost to economic expansion. In order to fully harness this
demographic dividend, however, India needs to create enough jobs (including
jobs for women) while also providing skills training for the workforce.

Urbanisation

India is urbanising rapidly, although by 2030 nearly 3 in 5 Indians are still


expected to live in rural areas. Indias urban transformation is associated with
massive challenges in ensuring sufficient urban jobs and infrastructure, but it
also brings about investment opportunities and creates vibrant new markets.

Ageing

Despite a young and growing population, ageing is happening in India with


implications for social security, labour supply, labour productivity as well as
consumption patterns. A growing number of businesses in a wide range of
sectors are starting to tap the Indian senior consumer market.

Health issues

India is faced with many health problems that stem from inadequate urban
planning, worsening pollution and poor sanitation. Modern-day lifestyle
changes including unhealthy nutrition and physical inactivity have also led to
rising obesity and diabetes. This fuels consumer spending on health goods
and medical services, as well as shaping consumption in food and beverages.

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 4

INTRODUCTION

Indias population at a glance


Rapid growth

Relatively young

Population Growth Index:


2000 - 2030

Predominantly rural

Median Age of
Population: 2015 & 2030

Urban/Rural Population:
2015 & 2030

150

2000 = 100

India

Asia Pacific

125

World

100
2000

2015

2030

20

30

40

Median Age, years


India

Asia Pacific

World

Despite falling fertility and birth


rates, Indias youthful age
structure ensures that population
growth will remain strong.

2015

Urban
Inner circle:2015
Outer circle: 2030

2030

In 2015 the old-age dependency


ratio was 8.2%, meaning every
100 working-age Indians had only
8.2 elderly to care for.

Rural

Indias urban population will grow


by 45.7% over 2016-2030. Yet by
2030, nearly 3 in 5 Indians will
still be expected to live in rural
areas.

Source: Euromonitor International from national statistics/UN

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 5

INTRODUCTION

India matters
India has the worlds 6th largest consumer market
by total spending, although the majority of the
population is on low incomes and with little wealth.
Its large and growing population, combined with
rising incomes and an expanding middle class, will
create immense opportunities for companies.
India is home to 17.5% of the global population
It is set to overtake China to become the worlds
most populous country in 2025.
By 2030, Indias population will reach 1.5 billion,
up from 1.3 billion in 2015.
Rural/Urban Consumer Expenditure in
India: 2010-2030
Consumer expenditure,
US$ trillion

3.5
3.0

2.5
2.0
1.5
1.0
0.5
0.0
2010
2015
2020
2025
2030
Urban Consumer Expenditure
Rural Consumer Expenditure

Source: Euromonitor International from national statistics


Note: Data are in constant 2015 prices, fixed exchange rates. Data for
2016-2030 are forecast.

Euromonitor International

Source: Euromonitor Internationals Income and Wealth Distribution Model

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 6

INTRODUCTION
HARNESSING INDIAS DEMOGRAPHIC
DIVIDEND
URBANISATION
AGEING
HEALTH MATTERS

CONCLUSION

HARNESSING INDIAS DEMOGRAPHIC DIVIDEND

Unlike China, Indias working-age population is growing


India had 17.6% of the global working-age population in 2015. This share is set to rise further as Indias
labour force continues to swell. India is set to overtake China as the country with the largest working-age
population in the world in 2026.

Source: Euromonitor Internationals Future Demographics Model

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 8

HARNESSING INDIAS DEMOGRAPHIC DIVIDEND

Women are under-represented in the labour force


The proportion of women active
in the labour force is very low
and will even decline slightly
through to 2030.

% of male/female population
aged 15-64

Male and Female Labour Force Participation Rates in


India: 2010-2030
100
80
60
40
20
2010

2020
Male

2030
Female

Female Labour Force Participation Rate in India and


Other Emerging Countries: 2015
% of female population
aged 15-64

80

60

A major factor for Indias low


and falling female labour force
participation rate is occupational
segregation, which leads to a
lack of employment
opportunities for women. Indian
women tend to be grouped in
unproductive industries such as
basic agriculture, basic sales
and elementary services, and
handicraft manufacturing, but
these industries have seen very
weak growth in recent years.

The under-representation of
women in the labour force is a
waste of the demographic
20
India
Indonesia
Brazil
Nigeria
China
dividend that India could reap
from its young and rapidly
Source: Euromonitor International from International Labour Organisation (ILO)/Eurostat/national statistics
Note: Labour force participation rate is calculated as the labour force divided by the working-age population. growing working-age population.
40

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 9

HARNESSING INDIAS DEMOGRAPHIC DIVIDEND

Demographic boost to economic growth


Economically Active Population in India: 2015

Population Aged 15+ by Education in


India and Asia Pacific: 2030
Population with Higher Education
Population with Secondary
Education
Population with Primary Education
0

20

40

60

% of population aged 15+


India
Asia Pacific
Source: Euromonitor International from national statistics/OECD/UN/International Monetary Fund (IMF)
Note: Data for 2016-2030 are forecast

The share of the working age population in total population in India is set to edge up in the period through
to 2030. This creates a bulge in the working-age population that contributes to boosting headline economic
growth, as it provides a window of opportunity for India to improve productivity, increase domestic
production, boost savings, reduce the burden of the elderly on the working population and expand the
consumer market.
In order to fully harness the demographic dividend, the Indian economy must grow robustly and create
sufficient employment opportunities, especially outside of unproductive agriculture and traditional industries,
as well as for women of working age. On the other hand, the labour force also needs to be adequately
skilled in order to seize improved employment opportunities brought about by a growing economy.
Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 10

HARNESSING INDIAS DEMOGRAPHIC DIVIDEND

Case study: Xiaomi made in India


Chinas Xiaomi, the worlds fifth largest smartphone maker, has been noticed for its aggressive move to
India. It entered the Indian market in 2014, began manufacturing locally in 2015, invested in an Indian
digital media entertainment company in 2016, and pledged to dramatically expand its operations in India.
Xiaomis strategic interest in India testifies to the countrys competitive edge of a youthful and low-cost
workforce, along with the added advantage of a domestic market with great potential. Meanwhile in China,
rising labour costs have made manufacturing less appealing for many large firms like Xiaomi.

Xiaomis Smartphones Retail Value and Growth: 2014 - 2015

Source: Euromonitor International Competitor Analytics

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 11

INTRODUCTION
HARNESSING INDIAS DEMOGRAPHIC
DIVIDEND
URBANISATION
AGEING
HEALTH MATTERS

CONCLUSION

URBANISATION

Urban expansion in India


In 2015 Indias urban population
reached 421 million - the second
highest urban population in the world
(after China).

Growth Index of Total, Urban and Rural Population in


India: 2010-2030

2010 = 100

180
160
140
120
100
2010

2020
Total Population

2030

Urban Population

Rural Population

Proportion of Urban and Rural Population Living


Below National Poverty Line: 2010 and 2015
Urban

Rural
0

10

15

20

% of population
2010

2015

25

30

35

However, the share of the population


living in urban areas stood at only
32.9% of the total population in 2015,
compared to the global average of
54.0% of the total population.
Indias relatively slow urbanisation is
due to underinvestment in Indian
cities. The government's definition of
urban areas, which excludes periurban areas (i.e. immediately
adjoining urban areas which are in a
process of urbanisation but are
formally outside urban boundaries),
also contributes to the low proportion
of urban population.
By 2030, Indias urban population will
reach 631 million, but 880 million
people will still live in rural areas.

Source: Euromonitor International from national statistics / UN

Euromonitor International

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AND MARKET IMPACT

PASSPORT 13

URBANISATION

Challenges and opportunities of urbanisation in India


Opportunities
Urban households generally enjoy
higher purchasing power
Greater demand for consumer
goods and services
Transition to smaller households
can boost spending and give rise
to new consumption trends
Investment opportunities in
housing, utilities, transportation
and other urban infrastructure

Challenges
Over-crowding leads to housing
shortage and a rising number of
people living in slums
Lack of urban job opportunities
exacerbates poverty and inequality
Pollution and associated health
issues
Inadequate infrastructure of
improved water, sanitation and
electricity affects the business
environment in urban areas

Euromonitor International

Top 5 Most DenselyPopulated Cities in the


World: 2015
Delhi (India)

Bangalore (India)

Lagos (Nigeria)

Kolkata (India)

Karachi (Pakistan)

9,000

18,000

Persons per sq km
Source: Euromonitor International from national
statistics/UN
Note: Based on a ranking of the most important cities
(capital cities, economic and political centres) in each
of the world's 80 major countries.

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 14

URBANISATION

Profile of the urban Indian consumer


The Average Urban Indian Consumer in 2015:

Lived in
households with
an average size
of
4.7 persons

Earned a
disposable
income of
US$2,152 per
capita

Mostly on food
& non-alcoholic
beverages,
transport and
housing

Spent on
average
US$1,467 per
capita

Consumer Spending Patterns in Indias Key Cities: 2015


Delhi
Mumbai
Bangalore
Kolkata
0%

20%

40%

60%

80%

100%

% of total

Food and Non-Alcoholic Beverages


Transport
Miscellaneous Goods and Services
Housing
Clothing and Footwear
Household Goods and Services
Health Goods and Medical Services
Hotels and Catering
Alcoholic Beverages and Tobacco
Leisure and Recreation
Education
Communications

Source: Euromonitor International from national statistics/UN/OECD

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 15

URBANISATION

Case study: Sharp Corp seeing an opportunity in urban air pollution


A 2014 WHO report stating
Retail Sales and Market Growth of Sharp Air Purifiers: 2014 - 2015
that 13 out of the worlds 20
most polluted cities were
in India drew the attention of
companies and consumers
alike. Ever since, the demand
for residential air purifiers in
India has been growing rapidly.
Japans Sharp Corp a
dominant player in Asias air
purifier market registered a
37.1% year-on-year market
growth in 2015 (albeit from a
low base), making India the
fastest-growing air purifier
market globally for Sharp Corp.
Given the continuing rapid
urbanisation, air purifiers is set
to be the fastest growing
category within air treatment
products in India, with
companies focusing on
Source: Euromonitor Internationals Competitor Analytics Model
smaller/portable and more
affordable air purifiers.

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 16

INTRODUCTION
HARNESSING INDIAS DEMOGRAPHIC
DIVIDEND
URBANISATION
AGEING
HEALTH MATTERS

CONCLUSION

AGEING

Elderly population growth is accelerating


Population Aged 65+ in Total Population: 2001-2015
and 2016-2030

Although the Indian population is


young and growing, the share of
the population aged 65 and over is
projected to rise dramatically, from
5.4% of the total population in 2015
to 8.3% in 2030. In absolute terms,
the population aged 65 and over is
set to reach 125 million by 2030.
The population dynamics driving
Indias changing age structure are
rooted in the combined impact of
increasing life expectancy, lower
fertility and declining birth rates on
the back of social changes. Indians
now enjoy a life expectancy of 68.6
years, which is 10.7 years longer
than back in 1990.

Source: Euromonitor Internationals Future Demographics Model


Note: Data for 2016-2030 are forecast

Euromonitor International

Ageing puts strains on social


welfare and public healthcare as
well as having important
implications in terms of labour
productivity, consumption patterns,
and private savings.

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 18

AGEING

Older, sicker and poorer


Despite rising longevity and Indias strong economic
growth, the majority of elderly Indians remain on low
incomes. Data from the National Sample Survey
Organisation (published in 2015) suggests that 40% of
elderly Indians live below the poverty line and 90% are
neither covered by any state pension nor have any family
to take care of them.

Average Gross Income of


Population by Age in India: 2015
and 2030
65+
60-64
55-59

According to the UN Population Division, nearly half of


elderly Indians have at least one chronic disease such as
asthma, angina, arthritis, depression and diabetes.

50-54
45-49
40-44

35-39
30-34
25-29
20-24
15-19
0

2,000

4,000

6,000

US$ per capita


2015

2030

Source: Euromonitor International from national statistics


Note: Data are in constant 2015 prices, fixed exchange rate. Data
for 2030 are forecast.

Euromonitor International

Social support for the elderly remains inadequate. For


instance, the governments Indira Gandhi National Old
Age Pension Scheme, which covers elderly Indians living
below the poverty line, offers a meagre monthly pension
of INR200 (US$3) to those aged 60-79 and INR500
(US$7.50) to those aged 80+. Meanwhile, Indias health
insurance scheme for the poor only covers those aged 65
and younger, leaving older people particularly vulnerable.
Given the majority of elderly Indians do not have any
pension, labour force participation is high among the
over-65s. In 2015, a massive 51.6% of the population
aged 65+ participated in the labour force, up from 43.0%
in 2010.

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 19

AGEING

Businesses are beginning to target the senior consumer segment

Declining fertility
leaving fewer
children
available to care
for elderly
parents

Euromonitor International

Epoch Eldercare is looking to tap


India's eldercare market. Clients can
enjoy intellectual companionship with
Epochs specialists, who typically hold
degrees in psychology or occupational
therapy and have soft skills like
patience and empathy.

Rural-urban
migration for
employment
separating
families
Changing social
expectations
regarding intergenerational
family obligations
Elderly
increasingly
live alone and
demand
products and
services that
cater to their
needs

Senior Shelf is a senior-focused online


shop selling products ranging from
wheelchairs to talking clocks. It is
looking to scale up the business into a
one-stop shop where elderly Indians
can buy everything from retirement
homes to travel packages.

Property developers Silverglades and


Age Ventures specialise in retirement
communities, which is a new concept
in India. These developments allow
seniors to live independently while
enjoying support with household
services and for medical emergencies.

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 20

INTRODUCTION
HARNESSING INDIAS DEMOGRAPHIC
DIVIDEND
URBANISATION
AGEING
HEALTH MATTERS

CONCLUSION

HEALTH MATTERS

Rising health problems


Rising incomes, improved standard of living and better healthcare have led to an increase in life
expectancy and healthy life expectancy for the majority of Indian people.
At the same time, however, like in many other emerging and developing countries, it was also rising
incomes along with urbanisation that have brought about lifestyle changes that lead to unhealthy nutrition,
physical inactivity, and rising levels of obesity and diabetes.

40

60

30
58
20
56

10
0

54
2010

2015

Infant Mortality Rate

2020

2025

2030

Healthy Life Expectancy at Birth

10.5

9.5
4

8.5

7.5
2010

2015

2020

Male Obese Population

2025

Diabetes Prevalence,
% of population aged 20-79

62

Obese Population,
% of population aged 15+

50

Healthy Life Expectancy


at Birth, years

Infant Mortality Rate,


per 000 live births

Other common diseases and chronic illnesses in India are frequently associated with inadequate urban
planning, overcrowding (including slum living), worsening pollution (of air, water and soil) and poor
sanitation. As of 2015, over half of all Indian households did not have water supply and 55.3% were without
a flush toilet (with the incidence being much higher in rural areas). The government of India has officially set
the goal of ending defecation in the open by 2019 by making sure every home has an indoor toilet.
Infant Mortality Rate and Healthy Life
Obese Population and Diabetes
Expectancy at Birth: 2010 - 2030
Prevalence: 2010 - 2030

2030

Female Obese Population

Diabetes

Source: Euromonitor International from WHO/OECD/International Diabetes Federation/national statistics


Note: Obese population refers to those with a BMI of 30kg/Sq m or more; Data for 2030 are forecast.

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 22

HEALTH MATTERS

From the perspectives of the economy and the


consumer market, growing health problems will
affect the quality of the workforce and lower labour
productivity, with negative knock-on impacts on
business profits, household incomes and the wider
economy.
Given rising health problems, Indian consumers
are increasingly health conscious. The greater
awareness of healthy living, together with rising
disposable incomes, will fuel consumer spending
on health goods and medical services. Between
2016 and 2030, consumer expenditure on health
and medical services in India is set to rise by 146%
in real terms, compared to a period growth of 119%
expected for total consumer spending.
While higher healthcare spending will benefit
businesses in the sector, growing healthcare costs
can squeeze consumer spending on other
discretionary items such as education, and leisure
and recreation. The share of consumer expenditure
on discretionary categories in India was already
relatively low, at 55.3% of total consumer
expenditure in 2015.
Euromonitor International

Real Average Growth,


% per year

Economic impacts of increasing health risks


Change in Consumer Spending & Spending
on Health Goods and Medical Services:
2001-2015 and 2006-2030
8

0
2001-2015

2016-2030

Total Consumer Expenditure


Consumer Expenditure on Health Goods and Medical Services
Source: Euromonitor International from national statistics
Note: Data are in constant 2015 prices; Data for 2016-2030 are forecast.

In 2030, decile 10s spending on health goods and


medical services will reach
US$875 per household
which will be 8 times higher than that of decile 1

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 23

HEALTH MATTERS

Consumers are opting for healthier options


India is one of the most dynamic markets in the world for better for you (BFY) foods and beverages with
reduced fat and sugar, as Indian consumers are increasingly health conscious. This greater awareness of
health and healthy living helps shape the performance of companies such as Coca Cola which witnessed
strong growth in bottled water and juice drink categories in India between 2008 and 2015.
Coca Colas Market Growth by Category in India: 2008-2015

Source: Euromonitor Internationals Competitor Analytics

Euromonitor International

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

PASSPORT 24

INTRODUCTION
HARNESSING INDIAS DEMOGRAPHIC
DIVIDEND
URBANISATION
AGEING
HEALTH MATTERS

CONCLUSION

CONCLUSION

A look into the future


India in 2030:

Population Density: 2000-2030

POPULATION (BILLION)

Persons per sq km

72.3

500
Mumbai

450
20

400
350

2030

LIFE EXPECTANCY (YEARS)

Delhi

2015

31.2

25

550

1.5

MEDIAN AGE (YEARS)

Growth of Top 10 Cities: 2015-2030

Kolkata

300
2000

15
Bangalore
2015

2030
Chennai

Population Age Shift: 2015 and 2030

Hyderabad
10

Ahmedabad

20
Surat
15
Pune

10
2030

5
2015

0
0

10

20

30

40
Age

50

60

70

79

Source: Euromonitor International from national statistics /UN


Note: Top 10 cities are based on the biggest cities according to the latest historic or census data

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Population, million

Population, million

25

5
Jaipur

PASSPORT 26

CONCLUSION

Challenges

Low education levels adversely


impact the quality of the labour
force and labour productivity.
Low female labour force
participation is a waste of
demographic dividend.
Unplanned urbanisation puts
strains on housing, public
services and urban
infrastructure.
Poor sanitation, unhealthy
nutrition and lifestyle changes
give rise to many health risks.

Euromonitor International

Due to population growth, rising


incomes and urbanisation, India
is an important consumer market
with immense potential.
With a large, youthful and lowcost workforce, India is a
competitive production base
one that offers the added
advantage of significant
domestic consumption.
Population ageing is creating
many new opportunities for
businesses to cater for the
specific needs of elderly Indians.

STRATEGY BRIEFING: BOOM OR BOMB INDIAS DEMOGRAPHICS


AND MARKET IMPACT

Opportunities

Key challenges and opportunities

PASSPORT 27

FOR FURTHER INSIGHT PLEASE CONTACT


An Hodgson
Income and Expenditure Manager
An.Hodgson@euromonitor.com

@An_Hodgson

RELATED ANALYSIS
Future of Work: 65+ Age Bracket Drives Labour Force Growth in India and China, 2
August 2016
Country Briefing Households: India, 31 May 2016

India in 2030: The Future Demographic, 10 December 2014


Emerging Focus: Rapid Urbanisation Leads to Rising Consumer Demand but
Creates Challenges, 23 Jul 2013
Indias Rapid Unplanned Urbanisation Creates Opportunities and Challenges, 22
April 2013

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PASSPORT 29

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