India’s Consumer Push

The Dirt:
The major developing nations are banking on a growing middle class, as export income drops, but India and China are finding this a tough feat. The giants of the emerging markets, India and China, saw tremendous growth in the last decade, but the recession has seen many such nations look beyond their usual income, from outsourcing and exports, to pushing for further spending by their own residents. But, the task has proven more difficult than expected, as many attempts to create products for the poor have gone awry.

India garnered attention for two big launches this year, Tata’s Nano and the supposed $20 laptop. The aim was to create products that low-income Indians could afford, catering to folks such as street vendors. But, time will tell how the Nano sells. From the makers of Jaguar, a car for £1,200 seems cheap, but that might not be cheap considering that many Indian families collectively live each day off of what one Londoner might be dole out for a cheap sandwich. The error continued when India aimed to bring technology to the masses when they boasted a $20 laptop, but glitches forced the price up, making it more like the laptops geared at more developed nations. Just like the case of AOL’s dial-up in Europe or Oprah’s free cars, those creating and giving products often forget the buyers and receivers may not have be able to afford the phone bill for dial-up, the taxes associated with the free car, or the gas for a new Nano, not to mention possibly having no access to electricity or Internet to power a new laptop.

The developments come at a time when the movie Slumdog Millionaire created a buzz worldwide, with Westerners getting a glimpse in to the lives of millions in the third world, and many Indians expressing displeasure with what may be deemed a vision of only one side of India. Recently, one of the child stars of the movie was embroiled in a move by her father to either sell her, or give her up for adoption, depending on the media report. The news reports shine the light on a nation many have said could be unstoppable if infrastructure, such as good roads and clean water, were made available to all. Fund managers in the U.S. and Europe are betting that the attempt to sell products to the masses in India and China will create a bigger urban class and leader to a prominent middle class, forcing a rebound in local economies. However, it may be that before these individuals buy cars and laptops, decent income, education and healthcare are necessary.