Two new metros, 8 half-metros to emerge due to evolving consumption patterns: EY report

India will see the rise of two new metros – Jaipur and Surat – by 2018, with a household income of over INR 800bn by 2018, according to an EY report titled ‘India’s growth paradigm: How markets beyond metros have transformed’. These are projected to record real GDP growth of 8.7% and 10.3% respectively from 2015-20, relative to metros’ 8.3%. As a result, both cities will cross the INR 800bn threshold within one to two years, with total consumption levels to reach 75%-80% of metros like Pune and Ahmedabad.

The report identifies 42 new-wave markets, which are expected to grow at 8.9% as compared to the 8 metros that are expected to grow at 8.3% CAGR in the 2015-20 period.

Ashish Pherwani, Media and Entertainment Advisory Leader, EY India says, “Non-metro growth is out-stripping that of metros in India. There are clear cases of unmet demand in India’s top 50 cities in certain sectors. This provides a huge opportunity for various sectors to both widen and deepen marketing strategies, and effectively tap into one of the world’s largest earning populations.”

The report also notes the rise of 8 new half metros, with household income exceeding INR 400bn by 2020. It also highlights 13 new-wave cities that represent a high-growth opportunity, but are largely untapped, according to the report. These include Patna, Raipur, Warangal, Gwalior, Dehradun, Allahabad, Rajkot, Vishakhapatnam, Jodhpur, Vijaywada, Ranchi, Kota and Jabalpur.

Additionally, the top 23 untapped markets, as identified by the report, are all new-wave cities. These 23 markets represent 19% of metros’ household income-but only 12% of retail outlets 15% of telecom centres and 17% of malls, notes the report.

The report further considers the potential of individual markets across each sector – FMCG, Retail, fashion and durables, Auto, Telecom and DTH, E-Commerce, Education, BFSI, and Real Estate. It delves into the expected ad spends across each sector, and highlights the top-10 untapped markets across each sector.

You can also download the EY report from www.ey.com/in/urban-growth.