India is set to overtake China to become the world’s 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.
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India is home to nearly a fifth of the global population. It also has the world’s 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.
The share of working-age population in India’s 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.
India is urbanising rapidly, although by 2030 nearly 3 in 5 Indians are still expected to live in rural areas. India’s 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.
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.
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.