Household demand now separates India from several major Asian economies, manoeuvring a slower global backdrop. India’s private consumption is above 60% of GDP, giving companies a stable internal market. China’s consumption stands near 40%, and Barclays’ Investment Outlook 2026 described China’s move toward a more consumption-driven model as “lengthy” and “costly”.
This difference matters for 2026. The report said markets will pay far more attention to earnings than to valuation gains, and it added that investors will look for companies applying AI to strengthen operations rather than depending on a narrow group of global technology firms. Barclays released the outlook earlier, and the document laid out how Asia will steady as the US cools and Europe settles into a slower pace.
Barclays on India’s consumption cushion
The report noted that India’s consumption share remained above 60% and said this supported a more reliable base for companies linked to domestic demand. It added that this weight of household spending “reinforces the positive outlook for Asia as momentum regains strength.” Firms in healthcare, logistics, consumer services and urban infrastructure operate with more predictable revenue because their customer base is internal rather than dependent on external cycles.
China’s 40% consumption share placed it on a different path. Barclays said China was working through a rebalancing away from property and exports toward household demand. It described the process as slow and policy-heavy, requiring sustained measures to encourage consumption while the property sector remained weak.
Barclays on key sectors high on AI usage
The report identified four sectors where AI is already part of day-to-day operations and where India’s domestic market supports consistent use.
Healthcare
The analysis said “AI-driven diagnostics, drug discovery and personalised medicine are boosting efficiency and medical outcomes, creating new opportunities for medtech and biotechnology firms.” In India, diagnostics networks and pharma research units use these tools to improve screening and trial processes, and demand for such services is tied closely to population trends.
Defence and cybersecurity
Barclays noted “renewed investment in resilience” as geopolitical and digital risks increased. It said this pattern would support defence and cybersecurity spending. Indian defence manufacturers and digital-security providers depend on ongoing public and corporate requirements for monitoring, secure communications and risk detection.
Automation and robotics
The report said “automation and robotics continue to transform manufacturing and logistics through smarter, AI-enabled systems.” Indian automotive, consumer goods and logistics companies use such systems for predictive maintenance, routing and warehouse management. These tools help raise utilisation and manage rising cost pressures.
Energy and clean power generation
The analysis stated that expanding AI infrastructure was “amplifying global energy demand, accelerating investment in clean power generation, grid modernisation and next-generation materials.” Indian utilities and grid operators face similar demands as digital services grow. AI aids demand forecasting and network planning, improving efficiency and reliability.
Across all four sectors, Barclays described these applications as part of the real economy. AI is used to support existing business lines rather than to create standalone technology themes.
The mandate: the non-negotiable quality check
Barclays stated that returns in 2026 will depend heavily on earnings delivery. That makes financial discipline as important as technology adoption. For India, this requirement combines naturally with the country’s consumption base. Companies serving a large domestic market and showing financial resilience will be able to adopt AI in ways that produce visible operational benefits.