Franklin Templeton’s latest thematic report, Beyond Necessities: India’s Affluence-Driven Growth put numbers to a shift already visible in India’s shopping baskets. Indians are no longer spending only to meet basic needs. The report said this transition, powered by higher incomes, urban migration, and easier access to credit, was reshaping the economy’s core demand engine.
India’s nominal GDP, Franklin Templeton projected, would grow at 11% annually between FY24 -FY30, taking the economy to about $7.3 trillion or Rs 6,28,000 lakh crore. Consumption was expected to contribute nearly 60% of that growth, putting India among the top three consumer markets globally by FY26.
The fund’s flagship Franklin India Opportunities Fund (FIOF) already carried a 30% exposure to this “rising affluence” theme. “We remain focused on long-term compounding themes, maintaining a strategic overweight in the consumer discretionary sector. The fund continues to emphasize the rising affluence consumption theme and aims to act as a sustainable driver of long-term returns,” the report said.
Franklin Templeton on what premiumisation meant in FMCG and how it unfolded
The report explained premiumisation in simple terms: consumers moving up the price ladder within the same category. A decade ago, detergent was detergent. Then came “advanced,” “eco,” or “fragrance-lock.” Each step up carried a higher price, and Indians were taking those steps.
Franklin Templeton’s data showed that premium FMCG made up 27% of total sales in FY24 but generated 42% of the sector’s growth. The numbers bring out the story clearly:
• Premium detergents grew 26% annually against 7% for mass variants.
• Premium hair care advanced 16% against 7%.
• Green tea expanded 25%, more than twice regular tea’s 10%.
“The premium portfolio now contributes a disproportionate share of incremental growth,” the report said, citing Hindustan Unilever, Dabur, Marico, and Britannia as the most visible examples of how brands captured this trend.
Franklin Templeton lists FMCG leaders who benefited from affluence wave
Franklin Templeton pointed to these companies as the clearest examples of India’s premiumisation in motion large players using innovation and brand trust to push consumers upward.
- Hindustan Unilever saw its beauty and home-care lines pull ahead, with unit realisations improving faster than volume growth. The company’s long focus on new launches in skin care, hygiene, and wellness helped expand its high-value portfolio.
- Dabur grew through its premium naturals range and health supplements. The report said innovation contributed a higher share to domestic revenue than before, showing how the company benefited from consumers moving beyond basic products.
- Marico’s premium foods and personal-care division delivered stronger profitability and higher contribution to India sales. Consumers who once stuck to regular hair oils were buying value-added and fortified options from the same brand.
- Britannia, a household name for decades, found its next growth tier in premium cookies, baked snacks, and dairy-based products. These lines gained faster traction in smaller cities, helped by wider distribution and urban-style marketing.
Franklin Templeton said these companies represented the new consumption logic i.e. organised FMCG leaders monetising aspiration through better design, trusted branding, and digital outreach.
Franklin Templeton on rise in premium appliance use
If FMCG showed how aspirations changed daily habits, appliances showed how they transformed homes. The report said India’s appliances and electronics market stood at about $75 billion, or Rs 6.45 lakh crore, in 2024, and was projected to reach $130–150 billion, or Rs 11.2–12.9 lakh crore, by 2029, growing 12–15% annually.
Premium and aspirational products already accounted for nearly half the market and were expected to reach close to 60% by 2029. The shift, Franklin Templeton noted, was driven by rising incomes, lifestyle changes, health awareness, and wider access to EMIs and online sales.
The report cited Redseer Research to show strong growth in categories such as air-conditioners, refrigerators, and washing machines. With air-conditioner penetration still around 8% of Indian households compared to 42% globally, the market had ample room to expand as households upgraded.
Wealth, savings, and the confidence to spend- Franklin Templeton estimates
Behind this consumption shift lay a deeper change in household wealth and confidence. Franklin Templeton estimated total household savings at around Rs 54 lakh crore in FY24, and projected them to cross Rs 82 lakh crore by 2030 and reach about Rs 1.32 lakh crore by 2035.
The top fifth of households continued to save the most, but the lower-middle class was catching up fast. The report estimated that savings in this group would triple to Rs 26 lakh crore by 2035.
Financial savings had also become more diversified. Mutual funds accounted for around 5% of household savings, up from 2% a decade earlier, and were expected to rise to 8% within the next ten years. Monthly SIP inflows stood at Rs 29,361 crore in September 2025, reflecting that households were not just saving more but saving regularly.
“The wealth effect from rising asset prices in equities, real estate and gold fuelled consumer confidence and discretionary spending,” the report said. As people saw their investments grow, they became more comfortable spending on lifestyle upgrades.
Tier 2 and rural India join the premium story
The affluence wave has spread beyond big cities. Franklin Templeton said rural monthly per capita expenditure rose from Rs 1,429 in 2012 to Rs 3,774 in 2023, a 2.6-times increase. The rural-urban spending gap narrowed to 70% in 2024 from 84% in 2012.
In housing, homes priced above Rs 1 crore made up nearly half of all residential sales in the first half of 2025, compared to just 15% in 2018. Similar trends were visible in vehicle sales: SUVs and higher-end two-wheelers dominated their categories, displacing entry-level models.
The brokerage said this broad-based consumption shift showed that aspiration was now rooted across India, not just in metros.
How Franklin Templeton positioned for this trend
The Franklin India Opportunities Fund had aligned itself with this consumption shift. It remained overweight on consumer discretionary, FMCG, retail, and financials sectors most directly linked to rising affluence.
The fund said it preferred companies that combined trusted brands, scale, and strong digital presence, enabling them to convert aspiration into loyalty. “The improving consumption trends appear to support India’s economic growth, which aligns well with the broader India growth narrative,” the fund team said.
What could slow the momentum?
The report identified two risks to this affluence-led growth. First, employment quality. Sustaining consumption required steady job creation, particularly as automation changed work patterns in services and IT.
Second, reliance on the wealth effect. “A sharp correction in equities or gold could reverse this trend and slow discretionary spending among affluent households,” the brokerage cautioned.
Even with these risks, Franklin Templeton said the structural factors, demographics, credit access, and digital reach remained firmly in place to support long-term consumption growth.
The long-term takeaway
Franklin Templeton’s analysis noted that India’s growth story was being written in its homes, not just in its factories. Premium appliances and high-end FMCG were no longer niche categories they were at the heart of how the economy was evolving.
As incomes rose and aspirations rose faster, the companies that understood this shift those that made better products, reached new consumers, and built long-term trust, would define the country’s next decade of growth.