Sitharaman cautioned companies against relying solely on premiumisation in urban markets, saying India’s next consumption wave will be driven by rising incomes across a wider population.
The government has raised its FY27 capital expenditure target to more than ₹12 lakh crore, while effective capital expenditure has crossed ₹17 lakh crore.
Sitharaman called for greater professionalisation of family businesses and higher corporate R&D spending to build Indian companies and products capable of competing globally.
Is India Inc’s Premiumisation Push Turning It Into a One-Trick Pony?
Finance Minister Nirmala Sitharaman has urged India Inc to look beyond affluent urban consumers, arguing that the next phase of growth will depend on broader consumption, investment beyond metros and stronger domestic innovation
Summary
Advertisement
India Inc has discovered a powerful growth engine: sell more expensive products to an increasingly affluent consumer. From cars and smartphones to hotels, FMCG and retail, premiumisation is lifting margins and revenues. But as companies across sectors chase the same affluent consumer, is India Inc becoming overly dependent on the top end of the market?
Finance Minister Nirmala Sitharaman has urged Indian companies to look beyond affluent urban consumers and focus on building a broader consumption base, warning that growth driven primarily by premiumisation in metropolitan markets may not be structurally sustainable.
Addressing the 53rd National Management Convention of the All India Management Association, Sitharaman said India was at a “structural inflection” point, with rising incomes and economic reforms reshaping consumption patterns.
The next phase of demand, she said, would increasingly be driven by households moving into income brackets where discretionary spending rises.
“India's consumption base rests on working families across agriculture, rural construction, transport and informal enterprise,” she said, arguing that companies would need to reach beyond existing affluent consumers to capture the next wave of demand.
Advertisement
Private consumption accounts for more than half of India's GDP and grew 7.7% in fiscal 2026, Sitharaman said.
Sustaining growth would therefore depend on expanding consumption across income groups, increasing investment beyond major metropolitan centres and building Indian companies capable of scaling while remaining resilient to global shocks.
Focus On Family Businesses
Sitharaman also called for greater professionalisation of India's family-owned businesses and higher corporate investment in research and development.
Over the next two decades, she said, Indian businesses would need to move beyond creating startups towards building enterprises that can scale, innovate and endure.
As family businesses expand, promoters would need to strengthen succession planning, governance and professional management, while developing capabilities in hiring, delegation, financial management, compliance, customer management and internal systems.
The broader objective, she said, should be to create competitive and resilient companies capable of contributing to India's long-term economic capacity.
From 'Made in India' To Innovation
Sitharaman said the next phase of industrial development should go beyond manufacturing products to creating them. Indian companies, she said, need to increase spending on R&D through in-house capabilities and partnerships with academia.
Advertisement
The objective should be to develop products that are conceived, designed and technologically developed in India before being taken to global markets, marking a shift towards building deeper domestic innovation capabilities.