In partnership with

Good morning. In today’s edition — Are urban Indians reaching a tipping point with their spending?; Indian conglomerate Adani Group faces further setbacks; and the government expects an ease in food inflation.  

THE TAKE

What Are Urban Indian Consumers Actually Buying? It’s Time To Take Stock

Last week, a new Uniqlo store opened in a mall near our office in Mumbai. Over 18,000 square feet in size, it is the third store opened by the Japanese apparel retailer in Mumbai, it’s the first one in south Mumbai and the 14th one all over India. 

On the day of the opening, almost everyone in the mall appeared to be walking around with Uniqlo shopping bags, a sign that they had come to the mall that day pretty much only to shop at the newly opened store.

Uniqlo’s attraction is good quality at affordable prices, including its popular plain t-shirt collection offered at Rs 990 each. The Uniqlo experience reminded me of the recent blowout bookings for Mahindra’s new Thar Roxx jeep which received 1,76,000 bookings within an hour of opening and now has a waiting period that could run into 2026.

Elsewhere, five-star hotels in Goa are full and charging a king’s ransom even before peak season. Rates in December, in case you were looking to stay at one of these hotels, start at Rs 30,000 or so for the 5 stars and go up to Rs 70,000 per night. Obviously, you could get deals if you hunt hard but those are not really deals, are they?

Not surprisingly, Indian vacationers are catching flights to Hanoi, Phuket, Bangkok, Bali and for the slightly more adventurous, Baku and Almaty in central Asia. That is if you are not going to the Emirates already. 

This brings us to the question for today’s Take — have Indian consumers hit their value ceilings?

A Tipping Point For Consumers?

The Federation of Automobile Dealers Associations president told me several months ago that average prices of cars had gone up from Rs 5-6 lakh to Rs 10-11 lakh per car in recent years and it would be tough for people to afford them, particularly when incomes had not kept pace.

Maruti Suzuki Chairman RC Bhargava echoed similar sentiments, though he ascribed the rise in car prices to reasons such as the new emission standards. More importantly, he pointed out that sales of small cars would not pick up until incomes caught up.

If incomes are growing steadily or just about keeping pace with inflation or are a little ahead, it is reasonable to expect consumers to reach a tipping point and cut back on discretionary expenditures or non-essential purchases. 

Has that tipping point arrived?

Anecdotally, the answer is yes. All the evidence points in that direction. Affordable housing is also on the list of things where purchasing has slowed down. 

Consumers Cut Spending

The larger issue is also the propensity to spend.

It appears that the propensity to spend is slowing down too. Intent is different from ability because intent is based on perceived need and your outlook on future income. It is also based perhaps on what your peer group is doing or not doing.

If people around you are slowing down on discretionary spending, quite likely you would follow too. It does not matter whether your income is steady or not.

While we keep looking out for data points on the consumption side beyond what slowing consumer-facing company sales are telling us, it is perhaps a good time to take stock of where consumers are seeing value and where not.

A Uniqlo store opening or a Mahindra Roxx launch may see blowout sales but that only shows that consumers are willing to occasionally spend because they see value or see something attractive. Otherwise, they are holding back. Remember, access to small loans has also become tougher as non-bank finance companies have had to tighten their lending norms.

Of course, rural spending has been stronger in recent months because of good monsoons and pent-up demand. That will not make up for the urban slowdown, but it will provide some cheer for now..

MESSAGE FROM OUR PARTNER

Securing top talent with our guide is a click away

Deel’s simplified a whole planet’s worth of information. It’s time you got your hands on our international compliance handbook where you’ll learn about:

• Attracting global talent

• Labor laws to consider when hiring

• Processing international payroll on time

• Staying compliant with employment & tax laws abroad

With 150+ countries right at your fingertips, growing your team with Deel is easier than ever.

Get the Guide

CORE NUMBER

Rs 94,400 crore

This is the Adani Group's long-term debt owed to domestic banks in the country, which stands against a cash balance of Rs 53,024 crore, most of which is parked with Indian banks. Borrowings from global banks account for 27% of the Adani Group's total debt, the company told investors in a privately shared note on Monday. This news comes amid multiple setbacks faced by the Adani Group, including a decision by French petroleum giant TotalEnergies SE to halt further investments in the conglomerate until bribery allegations are clarified. This, coupled with disruptions in India's parliament over the allegations and a fall in Adani dollar bond prices, has intensified pressure on the group. 

FROM THE PERIPHERY

—🔎 India’s antitrust body the Competition Commission of India (CCI) has denied American tech giant Apple’s request to put on hold an investigation report against it for breaching competition laws. This comes after the CCI had recalled probe reports in August the company alleged that those reports revealed trade secrets. The CCI had alleged that Apple was using its dominant position in the market for app stores on its iOS operating system, which was detrimental to app developers and payment processors, and even users. The CCI said Apple’s request to hold the report was untenable, Reuters reported. Apple, meanwhile, had earlier denied all allegations of wrongdoing. 

—💰 Equity investments in Indian real estate are set to soar 49% to $11 billion in 2024, according to a report by the Confederation of Indian Industry (CII) - CBRE, a commercial real estate service provider. Between January and September, inflows hit $8.9 billion, up 46% year-on-year, ET Now reported. Developer-led investments dominated with a 65% share, totalling $6 billion, while foreign investors, mainly from North America and Singapore, contributed $3.1 billion. With robust demand for office assets and land acquisitions, the sector is poised to surpass $10 billion for the first time. 

—📉 India anticipates food inflation to cool, thanks to a strong summer crop harvest, and holds a "cautiously optimistic" stance on economic growth. According to a government report, October saw retail inflation hit a 14-month high, driven by soaring vegetable prices. Favourable monsoon rains, healthy reservoirs, and higher support prices are expected to boost winter crop output, with early November trends showing easing food costs. Despite a rebound in key economic indicators, persistent inflation has strained middle-class budgets, dampening urban consumption. Economic growth is projected at 6.5-7% this fiscal, though global uncertainties and slowing exports could weigh on momentum.

SPONSORED

• Forward Future AI gets you AI-Ready: News, Education, and Community. Subscribe

• TechInsights AI Newsletter explore AI's full spectrum: trends, tech, policies, funding, innovations, and business impacts. Subscribe

SUPPORT THE CORE

Dear Readers,

Some of you have written to us expressing your intent to contribute to The Core’s journalism. While we currently do not have a subscription or membership plan, you can still support us by clicking the link below.

Another way to support The Core is by sharing this newsletter with like-minded people in your communities, colleagues, friend and family.

Was this email forwarded to you? Subscribe