Consumers companies are seeing early signs of demand pick up among the 400-million strong group of urban shoppers in India, providing a buffer to any volatility that might be unleashed by the country’s trade negotiations with the US.
Hindustan Unilever Ltd., the country’s no. 1 consumer goods maker that’s considered a bellwether for the sector, expects demand conditions to gradually improve boosted by macroeconomic tailwinds, with growth in April to September period exceeding the levels in the preceding six months.
The Indian unit of Unilever Plc also saw lesser “downtrading” this quarter — a practice when buyers start pivoting to cheaper or low-value packs — signaling a recovery in purchasing patterns, its Chief Financial Officer Ritesh Tiwari told reporters last week.
A day later, Reliance Retail, part of Mukesh Ambani’s energy-to-entertainment conglomerate, posted a 29% jump in quarterly profit, boosted in part by Maha Kumbh Mela, world’s largest religious gathering earlier this year.
The green shoots being flagged in India’s consumption story signal a yearlong malaise could be lifting. A strong domestic market will provide some respite to Indian firms as US President Donald Trump’s tariffs threaten global recession. China too is encouraging its firms to focus on the massive home market amid headwinds overseas.
Worst Over
“The worst of the domestic cyclical slowdown seems behind,” said Teresa John, an economist with Nirmal Bang Institutional Equities. Indian government and central bank-led growth boosters “could shield the economy from tariffs,” she said.
About $12 billion of tax sops announced in February, a rate cut this month with signs of more to come, subdued inflation and forecast of an ample monsoon are expected to perk up India’s buyers.
Broader economic factors “should augur well for discretionary income” in both rural and urban regions, Hindustan Unilever’s Tiwari said. He doesn’t expect any new headwinds impacting demand.
Macrotech Developers Ltd.’s Managing Director Abhishek Lodha said last week that he expects a lift to purchasing power for the mid-income housing segment, while Shriram Finance Ltd. — which lends for purchases of cars and bikes — sees demand for loans in urban India to recover in the coming quarters.
UltraTech Cement Ltd., India’s biggest maker of this key construction material, expects a strong volumes growth on back of housing and infrastructure demand.
Realtor DLF Ltd. is expecting sales in its high-end shopping complexes to grow as much as 10% in the year ending March 2026 after slightly underwhelming sales a year earlier, Pushpa Bector, senior executive director and business head at DLF Retail, said in an interview this month.
The coming quarter will be “critical” for India’s consumption story, said Satish Meena, founder of consumer data firm, Datum Intelligence. “There is expected to be more money with customers” over the next couple months, he said.
Tariff Shadow
While India’s central bank maintains optimism about domestic growth, a top finance ministry official has warned of the ripple effects of US tariffs.
The “first order” hit from US reciprocal tariffs on India, if imposed, could shave off up to 0.5 percentage point off its economic growth, which is “not a huge impact,” India’s Economic Affairs Secretary Ajay Seth said in Washington last week. “But the second order would be important” if the global economy grows less, he said.
“Given global headwinds, exports and private investments are likely to be more impacted relative to consumption,” Nomura’s Sonal Varma told Bloomberg News. “Labor market signals are also mixed, so consumption itself is not out of the woods.”
Some companies also remain cautious. Tata Consumer Products Ltd., the local partner for Starbucks Corp., said on April 23 it slowed the opening of outlets “a bit” due to softness in the economy.
India’s largest carmaker, Maruti Suzuki India Ltd. has forecast a modest 2% growth for the sector in the year through March 2026.
Trickle Down
Others, however, are accelerating their growth initiatives anticipating that the trickle down effect of tax sops, rate cuts and bountiful monsoon — it boosts rural purchasing power — will culminate into a shopping spree.
Reliance Retail, after streaming its operations and closing underperforming stores, plans to make a marketing and advertising splash for Shein in India after a low-key relaunch in February.
Ambani’s unit will also further develop its 30-minute delivery format JioMart to muscle into India’s booming quick commerce segment.
Unilever’s India unit is also stepping up investments.
“On macro, the triggers are tending biasing toward positive now,” Rohit Jawa, chief executive officer at Hindustan Unilever, told analysts on Thursday. “We feel this is the time for us to lean in.”
