Millennials’ Online Spending Power May Rise To Rs 16 Lakh Crore By 2020, Says Morgan Stanley

Millennials may have the ability to buy Rs 16 lakh crore worth of goods and services online by 2020, said Morgan Stanley in a recent report.

Already around 30 percent of India's population, individuals in the age group of 18-35, will likely do most of their shopping – or worth nearly three-fourths of their estimated spending power of Rs 22 lakh crore – online by 2020, the brokerage firm said. Their spending habits will pay a big role in shaping business strategy, said the report based on a survey of 3,110 millennials in 24 cities.

Morgan Stanley anticipates that India's millennial population will grow from 40.7 crore in 2016 to 50.4 crore by 2020. The brokerage firm has also included individuals who are currently defined as millenials but will have crossed the cap of 35 years by 2020.

A more important estimate is that this group will likely form 61 percent of India's internet base and 78 percent of its online shopper base, according to Parag Gupta, an equity analyst at the firm and one of the authors of the report. Both these parameters are expected to disrupt business strategy, he said.

The situation in India now is not too different from China where millennials were driving 80 percent of e-commerce 5-10 years ago, Gupta said in an interaction with BloombergQuint. “It's just that India is lagging China by 5-10 years. But, the phenomenon should be more or less similar,” he added.

Mobile Usage Expected To Surge

Intense competition in the telecom industry and quick adoption of mobile devices has ensured that internet penetration is growing quickly in India. A larger number of 4G handsets – as many as 83 percent of all imported smartphones – are being shipped into India, said Morgan Stanley.

Over the next three years, the brokerage firm estimates that India's internet penetration will rise to 60 percent from 38 percent in 2016. A large part of this internet user base is expected to come from the current millennial group.

BloombergQuint spoke to Gupta to find out what this means for businesses that are trying to ride the swelling wave of millennial spending.

Also Read: The Disruptive Millennial Generation Could Become India's Trump Card