The New Premium Consumer: Why Indians Are Paying More for Better Experiences
Indians bought fewer things last year and spent more money on them. This is the clearest signal in business right now, but most companies are taking it the wrong way.
NielsenIQ data showed the value of FMCG sales grew close to 13% in the recent quarter, while the volume of goods sold grew just 5%. People were not filling more baskets; they were paying more for the same basket.
The same pattern shows up in car sales over a longer stretch. SUVs made up just over half of passenger vehicle sales a year ago. Today they’re past 56%. Budget hatchbacks held nearly half the market as recently as 2019. Now they’ve fallen to about a quarter. This is a slow, steady shift toward bigger, better-equipped cars, not a sudden jump.
The same pattern shows up in car sales over a longer time. SUVs made up just over half of car sales a year ago. Small and affordable cars held nearly half the market back in 2019. Now they have fallen to about a quarter. The shift is happening slowly toward bigger cars with more features.
Real Premiumisation vs Forced Premiumisation in India
Premiumisation is often considered as one story. But it is actually two, and both require opposite responses.
Smartphones make this difference clear. IDC data showed the average price of a phone sold in India hit a record high in early 2026, although the total number of phones sold went down. The main reason behind this fall is the phones’ prices; phones under ₹8,500 have almost disappeared because rising component costs made them unprofitable to sell. Buyers looking for a cheap phone have a few choices; hence, they got pushed upward.
Hindustan Unilever planned to invest ₹2,000 crore over two years, starting February 2026, to expand its premium beauty, wellness, and home-care manufacturing. The focus would be on customers who are choosing to spend more.
The word “premium” means two different things here. In one place, it means a small bottom tier. In another, it means a growing top tier. A business that blends these up will misread its customers.
Why Indians are Paying More: Reliability over Luxury
Look at quick commerce: apps like Blinkit and Zepto started delivering groceries in minutes, and this became a pattern. A few years back, fast delivery cost extra. Now most buyers expect it as standard, and platforms have had to absorb that cost.
People are willing to pay more for premium products to fix things that annoy them. They pay to avoid running out of something, waiting too long, or being let down. They pay much less for nicer packaging alone.
One key factor: some of this spending is funded by borrowed money. Indian households have taken on more unsecured, everyday-spending debt in recent years, with younger borrowers accounting for a large share of it. If people did not receive credit easily, some of this premium demand could go down faster than the headline suggests.
New Premium Consumer Trend for Indian Businesses
Before raising prices or launching a premium line, companies should check their own sales data. If sales of the cheapest product fall even though people still buy it, that’s forced premiumisation. But if customers choose the pricier option on their own while the cheaper one still sells well, that’s a real preference shift.
There are two situations, and each needs a different strategy. If customers are choosing to pay more, focus on quality, service, and reliability. If the cheap option is disappearing, protect your lower-priced tier. This is still where most of your volume and your most price-sensitive buyers live.
The plan for premium to be temporary. Whatever you charge extra for today will become standard eventually, the way quick delivery did. The advantage isn’t the higher price. It’s staying ahead of the point where that price becomes the norm.
Last Verdict
Premiumisation in India has two different trends, running in opposite directions for different customers. Fix a real, specific frustration your customer already feels and keep checking whether they’re paying more by choice or by necessity. That difference will decide which businesses grow from this shift and which ones get their pricing wrong.
Frequently Asked Questions
Why are Indians paying more for better experiences?
Higher incomes and changing lifestyles are encouraging some customers to choose more expensive products. At the same time, rising costs are making some cheaper products harder to sell.
What is forced premiumisation?
When cheaper products disappear, and customers do not get enough choices at low prices, this is called forced premiumisation. It pushes people toward more expensive products even when they do not want an upgrade.
Which industries are getting new premium customers?
Automobiles, smartphones, and FMCG beauty and personal care are the segments where people are willing to pay more if you are assured of improved services.
Should a small business raise its prices for better service?
A small business can increase costs if it removes a real customer frustration, like unreliability or delay. A price increase without that benefit risks losing customers who had no better option before.
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