Economy: India to become the world’s “most sought-after consumer market”
Virendra Pandit
New Delhi: India will play a bigger role in global economy over the coming decades and become the world’s “most sought-after consumer market,” a Morgan Stanley report said on Monday.
Morgan Stanley, a leading global financial services firm, specializes in investment banking, wealth management, and investment management. They provide a wide array of services to corporations, governments, institutions, and individuals across the globe.
According to the media, it said, with India’s credit to GDP rising and manufacturing likely gaining a bigger share in GDP, its role in global economy will significantly go up.
India is on track to gain more share in global output in the coming years due to a mix of strong foundational factors.
These include robust population growth, a functioning democracy, stable macroeconomic policies, improved infrastructure, a rising entrepreneurial class and better social outcomes. “India will become the world’s most sought-after consumer market. It will undergo a major energy transition, credit to GDP will rise, and manufacturing could gain share in GDP.”
The report also noted that these strengths will help India become the world’s most sought-after consumer market. Besides, it is expected to undergo a major energy transition and experience stronger growth in credit and manufacturing sectors. The falling intensity of oil in India’s GDP and a rising share of exports, especially services, will support fiscal consolidation.
The government is likely to achieve a primary surplus within three years. This, along with reduced saving imbalance, could lead to structurally lower real interest rates. This combination of high growth, low volatility and falling interest rates supports higher price-to-earnings (P/E) ratios in the equity market. It highlighted that Indian households are shifting their investments towards equities, and this trend is expected to continue.
The improved macroeconomic stability and changes in household balance sheets are supporting the sustained demand in the stock market. Even though stocks have de-rated compared to long bonds and gold, India is steadily gaining a bigger share in global GDP. The soft earnings growth phase, which began in the second quarter of FY2025, seems to be ending.
However, the market is still cautious.
Despite foreign portfolio investor (FPI) positioning being at its weakest level since data began in 2000, Morgan Stanley said it remains confident in India’s long-term prospects. India’s low beta implies it could perform well during a global bear market but may underperform during a global bull run.
However, the report also warned about downside risks such as slowing global growth, worsening geopolitics, rising oil prices and continued supply chain disruptions, especially in areas like rare earth materials and fertilisers.
