India's next consumption growth to be driven by rising incomes: FM

Finance Minister Nirmala Sitharaman said India’s next consumption phase will be driven by households moving into higher income groups, urging corporates to look beyond the urban elite and increase spending on R&D to drive innovation.

India’s next phase of consumption growth will be driven by households moving into higher income groups, with rising disposable incomes accelerating spending on discretionary goods and services, Finance Minister Nirmala Sitharaman said, urging corporate leadership to look beyond the “formal urban elite.”

Next Phase of Consumption Growth

Addressing the Platinum Jubilee National Management Convention 2026, FM Sitharaman said lower youth dependency and greater longevity will shift household budgets towards “healthcare, personal wellness, consumer durables and quality services.”

“The next phase of consumption will be driven by upward mobility into brackets where discretionary spending accelerates,” the FM said, stressing that “corporate leadership must nevertheless avoid designing only for the formal urban elite.”

Private Sector Participation and Governance

As the government opens sectors such as space and nuclear energy to greater private participation, Sitharaman said more of India’s development needs can be met through the market, with industry expected to step forward to address them.

She also highlighted the importance of governance and trust. “Sound governance is not simply a set of external codes to be adopted wholesale. It grows out of how institutions actually conduct themselves, and out of the standards they hold themselves to. So start with the conduct, and above all, with trust,” she said.

Call for Engagement and Quality

FM Sitharaman also called for greater engagement between businesses and the government to resolve disagreements before they escalate into legal disputes. “Legal recourse will always remain available, but every disagreement need not begin as litigation,” she said.

“There is considerable value in engaging early, placing evidence on the table, participating seriously in consultations, and working towards solutions before differences become disputes. Equally, businesses must provide predictability, transparency, and a willingness to listen.” The Minister also highlighted that a mature economy should be capable of handling disagreements “without immediately becoming adversarial” and emphasised that quality must become India’s next national movement.

Focus on R&D and Leadership

Sitharaman further stressed the need for companies to increase spending on research and development (R&D), either in-house or through collaboration with academia, to drive innovation and improve existing products.

“Corporates need to spend more on R&D, either in-house or through collaboration with academia. This will help in driving innovation and improving existing products. That spending raises a further question,” she said. The Finance Minister underlined the need to develop leaders capable of working across disciplines rather than remaining confined to individual functions. (ANI)

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