The only constant thing in the market is change. Some of these changes are cyclical; Some guidance. But there are some that have the potential to redefine the way businesses, economies and societies work. These structural changes, or megatrends, have emerged as important forces shaping India’s economic growth.
Rising prosperity and premiumization in consumption
Globally, as per capita income exceeds $2,500, discretionary spending increases, leading to premiumization. A similar change is taking place in India, led by affluent families, especially those with an annual income of more than Rs 50 lakh. Also, the share of low-income group families is continuously declining as India moves towards becoming a developed nation.
Premiumisation is clearly visible in consumer spending. In FY25, Apple’s annual sales in India reached a record 90 lakh units, mainly driven by iPhone sales. Today, more than half of the new cars sold in India are SUVs. Quick commerce platforms are growing rapidly as lifestyle preferences are shifting towards 10–20 minute delivery.
This premiumisation is also spread across various categories. For example, affluent households are moving away from preservative-rich products toward healthier alternatives such as organic food. Talking about health, healthcare and wellness lie at the intersection of our growing prosperity and changing aspirations.
Healthcare and Wellness: A Multi-Sector Opportunity
Healthcare is not a single industry but an ecosystem of more than 150 sub-sectors. These include hospitals, diagnostics, pharmaceuticals and CDMO (Contract Development and Manufacturing Organization). With increasing purchasing power, people are demanding better treatment and advanced health services. The prevalence of health insurance is also increasing, increasing the demand for better quality care. Meanwhile, global megatrends are fueling growth in sectors like CDMO. Today the Chinese CDMO industry is valued at approximately US$25 billion, while India’s is valued at US$7 billion. Although the base is small, India is expected to grow rapidly over the next five years, driven by 1) supply chain development and 2) adoption of ‘China + 1’ strategy by global companies.
Saurabh Gupta, Equity Head, Bajaj Finserv Mutual Funds
Growing electricity demand amid global energy transition: From renewables to AI power demand
The global transition toward green energy began about a decade ago. However, with the rise of AI, the demand for energy has increased rapidly. For example, a ChatGPT query consumes about 10 times more power than a Google search. Therefore, power demand in the US, which was stable for 15 years, is now projected to grow at a 2–3 percent CAGR over the next five years, primarily due to power demand from data centers. In Europe, electricity demand is being driven mainly by the electrification of heating and data centres.
For India, export-oriented companies in the power value chain—such as transformer, inverter and transmission equipment manufacturers—will benefit from this global power demand growth. Additionally, a parallel green energy shift is also taking place in India, which is meeting the increasing demand for electricity. At COP26, India pledged to build 500 GW of non-fossil fuel power capacity by 2030, and progress so far has been rapid. Renewable energy now contributes 50% of the country’s total installed power capacity of 485 GW – a milestone achieved five years ahead of schedule. India ranks fourth globally in renewable energy capacity, making the country a key player in the global clean energy transition.
Financialization and the rise of digital payments
When a country grows, its banking sector also grows. India is also no different from this. Financialization and digitalization are emerging as defining megatrends for India’s economy, at the center of which is Unified Payments Interface (UPI), India’s homegrown digital payments platform. UPI has transformed payments, reduced the use of cash, improved regulatory oversight, reduced the need for bank branches and ATMs, and accelerated formalization in the financial system. On July 14, 2025, UPI processed over 650.26 million transactions, surpassing Visa for the first time.
According to IMF, India is now leading the world in faster retail payments. This milestone, achieved just nine years after the launch of UPI, underlines the pace and scale of adoption in India’s digital ecosystem. However, beyond core financial services, we are just scratching the surface. Equity investments, mutual funds, insurance and online banking still serve only a small segment of the population. This gap presents a significant opportunity for Indian banks and financial services companies to transform into financial conglomerates.
Clearly, megatrends rarely develop in isolation. They intersect and strengthen each other. Together, technology and finance accelerate digitalization. Rising incomes and demography are reshaping consumption. The adoption of AI and electric vehicles is changing the direction of energy demand. These overlaps reinforce the durability of the trends.
India’s current economic landscape encompasses many emerging trends, including Industry 4.0, semiconductors, data centers and smart urbanization. For investors, the key is to filter out the noise and focus on businesses that are aligned with these long-term changes. Because a diversified portfolio spanning megatrends provides flexibility and balance. Therefore, investors should look beyond the obvious so that they can identify tomorrow’s winners and prepare the portfolio for long-term wealth creation.
Note: Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Author – Saurabh Gupta, Head – Equity, Bajaj Finserv MF
