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Key takeaways:

  • Recent consumption trends in India are characterized as “K-shaped”. Growth in upper income households has been surging, while growing at a slower pace in lower income households.
  • The government is focused on boosting rural and youth consumption by increasing employment and raising labor productivity.
  • If successful, this would create an “F-shaped” consumption growth pattern with growth in upper- and lower-income households expanding at a healthy pace.
  • Our portfolio managers see attractive investment opportunities in the Indian banks, consumer discretionary and industrials sectors. Our report includes individual case studies exploring the Indian consumption theme within these sectors.

In this report, we consider the following scenarios and look at two individual case studies exploring the Indian consumption theme within the consumer discretionary and industrials sectors:

  • Supply-side measures.
  • Public and private partnerships.
  • Current consumption trends.
  • Labor-force participation.
  • Tax cuts for middle-income earners.
  • Production-linked incentive (PLI) 3.0 in 2026.
  • Case study on HDFC Bank: India’s largest private sector bank by loans and is one of the fastest-growing large banks with consistent market share gains and strong asset quality.
  • Case study on Zomato: A leading food delivery and quick commerce platform in India founded in 2008.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Equity securities are subject to price fluctuation and possible loss of principal. 

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Investments in companies in a specific country or region may experience greater volatility than those that are more broadly diversified geographically.

Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. Past performance does not guarantee future results.

IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. All investments involve risks, including possible loss of principal. There is no guarantee that a strategy will meet its objective. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where a strategy invests in emerging markets, the risks can be greater than in developed markets. Where a strategy invests in derivative instruments, this entails specific risks that may increase the risk profile of the strategy. Where a strategy invests in a specific sector or geographical area, the returns may be more volatile than a more diversified strategy.

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