India is a consumption driven story. What works in India’s favor on the private consumption front is the size of its consumer base, the rising income, and the aspirations of its young population, which is the largest in the world. As for investments, with the size and scale of operations it has to offer to global companies, the availability of skill and talent, and technology and innovation capabilities, India continues to be an attractive investment destination. India can rely on its own domestic demand to firepower its growth, specifically, private consumption (accounts 60% of its GDP) and investment spending.

What adds an intriguing dimension is the convergence of favorable conditions. The government's emphasis on substantial capital expenditure, encouraging higher private capital spending, creates a multiplier effect on the economy by generating employment, boosting per capita income, and ultimately driving consumption demand. Additionally, India has reached a crucial inflection point, surpassing a GDP per capita of $2500. Historical examples from countries like the United States in the 1950s/60s, Germany in the 1960s, Japan in the 1970s, South Korea in the 1980s, and more recently, China in the 2000s, indicating accelerated consumption, particularly in discretionary spending.

In response to these trends, we’ve devised a smallcase to capitalize on Indian consumption trends, a long term defensive structural play while continuing to focus on small and mid-cap companies.