India ready for a premium wealth show while US missiles rattle the world

Heard you're buying an Hermes bag this festive season? Don't be surprised if someone asks you that.

For more than 1.4 billion Indians, the festive season from Ganesh Chaturthi and Durga Puja to Diwali and Christmas is as much about shopping as it is about celebration. Indians spend heavily during the festive season, with BCG estimating festive consumption at ₹12-14 lakh crore last year.

This year's festivities, however, arrive under a cloud of geopolitical uncertainty. The US-Iran war has disrupted global supply chains, rattled commodity markets and triggered inflation fears across the world. The next test of whether that conflict influences India's economy may not come from stock markets or oil prices alone. It could play out in shopping malls and online checkouts across the country.


There is little evidence so far that Indian consumers are preparing to tighten their purse strings as companies expect shoppers to continue upgrading and going for premium products.

Also Read: Brands see strong consumer appetite this festive season despite war-led woes

India's festive spending is staying resilient despite US-Iran war

"I don't think people will hold back purchases despite the war situation. For that to happen, there has to be a more significant pass-through of cost pressures to retail categories. The GST cuts last year have also helped keep consumer sentiment buoyant," Sakshi Gupta, Principal Economist at HDFC Bank, told ET Online, adding that the US-Iran war has had two potential impacts: a pass-through to fuel prices, which has not been disproportionately high, and an indirect impact through companies passing on higher costs to consumers, which is still not happening.

The West Asia conflict has raised fuel, logistics and packaging costs, hurting profit margins across several sectors. However, companies are passing on only part of the higher costs to consumers to avoid weakening demand, Kinjal Shah, Senior Vice President and Co-Group Head, Corporate Sector Ratings at ICRA, told ET Online.

Several sectors including auto components, commercial vehicles, textiles (man-made fibre [MMF] and exports), tyres, quick service restaurants (QSR), and retail apparel have seen a moderate impact owing to cost pressure and demand sensitivity. In contrast, cotton textiles, hospitality, pharmaceuticals are relatively insulated with limited direct exposure to trade disruptions, she added.

The size of the festive shopping cart may not change dramatically this year. Its value almost certainly will. Early industry estimates suggest consumers are willing to spend more on premium products even if purchases in the mass-market segment remain subdued. India's appetite for premium goods is increasingly becoming a barometer of the economy's underlying strength.

Companies and economists say the premiumisation shift reflects rising household wealth and a consumption pattern that has remained resilient despite global uncertainty, suggesting India's consumer story is increasingly being defined not by buying more, but by buying better.

Corporate confidence is extending beyond sales forecasts. According to an ET report, temporary festive hiring in India is expected to rise 8-25% from last year despite geopolitical uncertainty, underlining industry expectations that consumer spending and festive demand will remain resilient.

Also Read: On a war footing, India Inc to ramp up festive hiring

Amazon, Flipkart and brands bet big on premium consumers

Amazon and Flipkart are already projecting the shift. The two e-commerce companies are focusing more on value than volumes this festive season, with sellers placing larger orders for premium products while keeping inventories of mass-market goods relatively lean, industry executives told The Economic Times.

Industry estimates suggest festive orders for premium products have risen 20-25% from a year earlier, while demand in the mass market is either flat or growing only marginally. Orders for entry- and mid-range smartphones have edged lower, while televisions and entry-level appliances are expected to grow 4-5%.

Also Read: Premium takes priority in ecommerce carts this festive season

The divergence marks an important shift in India's consumption story. For years, growth was driven by millions of first-time buyers entering the formal consumer economy. Increasingly, companies are finding that their next phase of growth depends on existing consumers moving up the value chain, which is about moving from mass-market products to premium offerings across categories.

The shift is extending well beyond electronics and online shopping. Analysts say premium products continue to outpace the broader market, suggesting the trend reflects a structural change in India's consumption pattern rather than a one-off festive-season phenomenon.

Premium products becoming India's key growth engine

Ronak Shah, lead analyst for FMCG at Equirus Securities, said India remains in the early stages of premiumisation, with rising disposable incomes, growing brand awareness, greater product availability and the rapid expansion of modern trade, e-commerce and quick commerce expected to support the trend over the long term.

Recent quarterly earnings also reflect that shift. Hindustan Unilever reported double-digit growth in premium skincare, haircare and personal care products, while Dabur said its premium brands grew at twice the pace of its regular portfolio. Tata Consumer's value-added salt portfolio recorded 13% volume growth against 7% growth in its overall salt business, while Colgate said premium toothpaste continued to outperform, Shah noted.

"Premiumisation is among the most important structural growth pillars for Indian consumer companies," Shah told ET Online.

High-value and branded products are growing faster than budget and unbranded offerings in sectors ranging from automobiles and hotels to FMCG, retail, smartphones and real estate, Kinjal Shah said.

"As consumers' aspirations and lifestyles evolve, premiumisation is expected to remain one of the key drivers of India's growth story," Shah added.

For corporate India, premiumisation is no longer merely a pricing strategy. It is becoming the primary engine of revenue growth.

Rising wealth is reshaping India's consumer economy

Consumer spending in India rose to a record ₹49,686.22 billion in the January-March quarter of 2026, up from ₹47,933.58 billion in the previous quarter, Trading Economics said citing data from the Ministry of Statistics and Programme Implementation (MoSPI). The latest reading also marked the highest level, underscoring the resilience of household demand despite persistent global uncertainty.

Three decades after India's 1991 economic liberalisation, the country's consumption story is increasingly becoming one of aspiration rather than mere affordability and that places business strategies into work to dangle the premium-product carrot. A country that once queued for Bajaj scooters, gathered around Doordarshan on black-and-white television sets and viewed imported goods as rare luxuries is now one of the world's fastest-growing markets for premium smartphones, luxury real estate, international travel and high-end automobiles.

The shift is visible not only in shopping baskets but also in tax returns.

India's ultra-rich are multiplying at a pace few would have imagined just a few years ago. Data shared by the Finance Ministry shows the number of individuals reporting annual incomes of at least ₹100 crore has jumped by more than 300% since 2021.

A growing affluent class creates immediate demand for premium products, while a much larger aspirational middle class widens the market by emulating those consumption patterns. Companies are increasingly designing products and marketing campaigns for consumers who may not be wealthy yet but want to buy into that lifestyle.

India's premiumisation story is far from over

The premiumisation of India's consumption story has been unfolding for some years now, and the trend is visible across sectors ranging from smartphones and automobiles to premium housing, Sakshi Gupta said.

Gupta said inflationary pressures from food and fuel have so far failed to meaningfully erode household spending, allowing discretionary consumption to remain resilient even as the global economy grapples with heightened uncertainty.

That resilience is underpinned by an economy that continues to outpace most of its global peers. India remains the world's fastest-growing major economy, creating jobs, expanding incomes and adding new consumers to the formal economy even as several developed markets contend with weak growth and cautious households.

While India's domestic demand continues to provide a cushion, the outlook for FY2027 remains clouded by geopolitical uncertainty, with higher fuel, input and logistics costs expected to weigh on corporate margins, Kinjal Shah said.

Companies are expected to manage the pressure through selective price increases, tighter control over discretionary spending and greater operating efficiencies. Despite the cost headwinds, ICRA expects most large Indian companies to remain financially resilient, supported by healthier balance sheets built over the past few years, even if global demand weakens further.