India ranking grows 6% year on year
The country and its brands embark on a new period of up-and-down, rollercoaster growth
India enters a new decade as the emergent world power it has long worked to become – and also, just as surely, as Narendra Modi’s India, after the Prime Minister soundly won a second governing term in the 2019 Indian general elections.
Prime Minister Modi’s first term was a rollercoaster. It was marked by economic highs – for a time last year, India was the world’s fastest-growing country – but also by the stress of adjusting to new demonetization and tax policies. By 2018, those stresses were largely in the rear view, and annual GDP grew by a reported rate of 6.8 percent. The government spoke of becoming a $3 trillion economy by 2020, and of becoming a $5 trillion economy (and the world’s third-largest market) by 2024.
Beyond the headlines about Amazon’s growth and Walmart’s takeover of Flipkart, India’s corporate ecosystem had countered fears of foreign dominance by putting forward a new class of Indian unicorns that included names like Swiggy, Ola Electric, Zomato, PolicyBazaar, BigBasket, and Delhivery. (Indeed, some of these brands have already entered this year’s BrandZ™ Top 75 Most Valuable Indian Brands ranking.)
As the government promoted its “Make in India” initiative to boost local manufacturing, the country also maintained its reputation for excellence in the B2B services sphere – even as cloud computing, Big Data, and AI continued to transform that industry.
Beyond the headline growth figures, there were also emerging green shoots of renewed consumer confidence in the early months of 2019. This optimism was not unfounded: even today, there remains a real hope that the spread of technology and infrastructure will transform the lives of Indians on either side of the urban-rural divide.
In later months of 2019, however, the mood in India has turned less sunny, as concerns have mounted over the health of the country’s economy. Amid much debate and uncertainty, and mounting global trade tensions, the government has announced an official unemployment rate of 6.1%, which may well be the highest in some four decades (though these statistics have been historically fuzzy).
Behind the wrangling over unemployment figures is a real concern that India may fumble its youth population boom – by failing to provide millions of young workers with the jobs that they need. India has a few decades left before it will follow China’s lead and become an aging country, and it needs to make these years count.
There are also concerns that, even in the wake of the BJP’s solid win, Indian society remains more polarized than ever before – especially around questions of how to define concepts like “nationalism” and “Indianness.”
This political divisiveness has spilled over into business world, where content like Surf Excel’s #RangLaayeSang Holi campaign drew sharply divergent responses in the public sphere. Some saw the Surf Excel advertisement as a welcome representation of Hindu-Muslim friendship, while others called for a brand boycott claiming that the ad was “humiliating to Hinduism.” It was a contentious debate that was amplified by Indians’ growing appetite for social media – a phenomenon that has itself been fueled by the spread of smartphones and persistently low data rates.
As India closes out the 2010s, then, its narrative is perhaps not the unconditionally positive one many had hoped for: that of a country moving upward from strength to strength. There is a sense, instead, that India will have to write a more balanced story during Prime Minister Modi’s second term, one in which great challenges are tackled alongside great opportunities.
To be sure, those opportunities will still be present even if growth does slow in the year (or years) ahead. For one thing, India has proved its innovation bona fides with the emergence of its aforementioned class of digital unicorns. Especially exciting are those Indian companies making waves in the business of on-demand home delivery, which some had feared would be wholly dominated by Amazon.
The truth is that since at least the advent of Mumbai’s famed dabbawala system, Indians have demonstrated a mastery of what is now known as “last-mile delivery.” Today, companies like Flipkart, Swiggy, Zomato, and Domino’s Pizza are leading the pack in marrying attractive user interfaces with rock-solid logistics technology, and with fast, hyper-local delivery teams. If Indian companies can ace delivery in some of the world’s biggest, densest cities, why shouldn’t global expansion be in their future?
These new delivery platforms have found especially notable success in their focus on the underserved consumers of “Middle India”: those residents of India’s second, third, and fourth-tier cities and towns, whose swelling numbers complicate old binary ideas about India’s urban-rural divide. Companies that learn how to unlock the value of these middle markets can not only win growth, but also ensure greater resilience in the event of future economic storms.
In addition to these disruptions, India is also in the throes of an information revolution thanks to the continuing rise of smartphones, which grew their user base by 18 percent in 2018 – alongside similar growth in less expensive, data-enabled “smart feature phones.” These devices, combined with cheap data (led, as ever, by disruptive telecom player Jio) and the government’s “Saubhagya” scheme to electrify rural India, stand to greatly improve the lives of millions of Indians.
One way in which Indians are already reaping the benefits of increased connectivity is through mobile transactions on the country’s new Unified Payments Interface (UPI). These transactions are growing fast and could soon surpass credit and debit cards as the country’s preferred alternative to cash. India’s finance industry players – both its established banks and its FinTech startups – also stand to gain handsomely from the fast adoption of UPI functionalities in everyday life, as more consumers open accounts to fully reap the benefits of this government-backed interface.
India is also undergoing significant disruption in the entertainment sphere. This is due to the rise of mobile streaming and gaming, as well as new rules that allow consumers to pick and choose the television channels they want to pay for. (Not to mention rising affluence that has allowed more consumers to purchase a television in the first place). Competition for subscribers should lead to exciting new shows and formats, increasing consumer choice at home while burnishing India’s reputation abroad as a Bollywood-inflected entertainment powerhouse.
That being said, the past decade of disruption, however beneficial, has also left Indian citizens feeling stressed and eager for greater stability. The news is no help in this regard. Trade disputes and political polarization hardly inspire feelings of peaceful reassurance. Nor do cross-border tensions with Pakistan, or concerns about terrorism at home.
According to Kantar’s Global MONITOR survey, 47% of Indians said they felt stressed in 2018, up from 39% the year prior. Foreign-run social media sites have not proven to be a balm for this unease, especially after fears have grown that Facebook and WhatsApp can be used to spread political misinformation.
In contrast, Indian brands and corporations may be able to play a role in decreasing Indians’ feelings of stress and dislocation by offering products that build trust, promote social bonds, and mitigate risk – while also helping people to turn their homes into calming bastions of stability. Brands can also aim to tell more compelling stories of reassurance, hope, and nostalgia.
At the same time, however, these same companies must also work to ensure the optimal balance between disruption and stability in their own organizations. Disruption for disruption’s sake will not help India’s companies succeed in the future – unless that disruption is married to reliable infrastructure, strong social purpose, and unified brand visions.
Innovation has many upsides, and there are plenty of reasons to be optimistic about India’s future. Nevertheless, hopes for a new decade of fast, painless growth may be overly optimistic. Instead, India may be embarking on another economic rollercoaster ride – for better and for worse.