Only 1 Cr Indians made ₹10L last year.
Every consumer business should watch out for this table 👇
It's been a while since I wrote a newsletter. We are back, and you will see a couple of experiments in how we write crisper 1-to 3-minute reads. Onto today’s edition.
Every consumer business should watch out for this table. Only 1 Crore Indians made over ₹10L in 2024.
And, I would argue that at ₹10L, even the government doesn't charge income tax. That is telling you something. The liquid cash in the hands of most Indians is minimal.
If you are building for anyone in the sub ₹10L income levels (~6.5 Crore people who filed ITR), you are in for a joy ride of razor-thin purchasing power and too much competition for too little business scale—unless you are an FMCG giant.
And don't get me started on building for India B2B, that battle is long lost. The only people you can build for are the rich, ultra-rich & maybe the Indian diaspora abroad.
Now you might have a couple of questions.
1. Most Indians don’t report their income.
Absolutely. But those transactions won't happen digitally, and most go-to-market motions for new-age product companies are digital. This means that until you deal in a shadow economy category (e.g., where cash is prevalent, like the real estate market), you can’t capture this audience.
2. Farmers who comprise 40% of the country's population don't file income tax.
1.2 Cr Indian farmers (about 8% of all farm households) earn more than ₹5 lakh annually. That's earning - not profit. 40L framers make more than 10L annually per "household". This argument falls flat, then.
3. In 10 years, people earning above ₹10L grew by 85%.
The time value of money will come into play. It's typically halved by the time that movement occurs. This means the value of ₹10L rupees in a few years will be equivalent to ₹5L today.
In hindsight, I knew this, but this table made it obvious why the Indian stock market looks the way it does. If you are building from India, share this with your team — get clarity before you try to overdo a category in India that you shouldn’t.
Along with what you make, what you save and invest is equally important. Visit my substack for personal finance and investing tips!
But why do reports/ articles keep talking about increased digital spending across all tiers? If income is low for most of the population, how are they spending on discretionary items. Can you help out here?