Transport and Communication Services are the Fastest Growing Sectors in India

Published on 04 Aug, 2016

Communication & Network IP Research

With over 1.33 billion citizens, India has a lot of people that need to get around and keep in touch.

As the economy grows amid favorable local economic climes as well as a healthy monsoon this year, Indian consumers are sure to spend, benefiting a bustling economy.

If stats released by the National Sample Survey Office are anything to go by, Indians are spending on transportation and communication more than ever before. Data on household expenditure suggests that the transport and communication service sectors saw some serious spending among both rural and urban populations.

Average household expenditures by Indian consumers was divided into four categories — transport services, miscellaneous consumer services, other services, and durable goods.

Here’s a snapshot of the Monthly Per Capita Expenditure (MPCE) for these four categories:

Expenditure Categories

Rural (MPCE in INR)
Urban (MPCE in INR)

Transport Services

64.01

163.94

Durable Goods

924.78

2270.43

Miscellaneous Consumer Services

143.48

389.14

Other Services

124.25

266.28

Source: NSSO Data


Transport Services Will Be a Huge Opportunity

Among transport services, bus/tram is a widely preferred mode of transport among both rural (~66%) as well as urban (~62%) households in India. The next most popular means of transport seem to be auto-rickshaws, with 38% of rural and 47% of urban households opting for it.

As urban sprawls grow, and road connectivity to smaller townships and villages improves, automotive companies such as Bharat-Benz, Ashok Leyland, TATA Motors, Piaggio would do well to invest in production lines for such modes of transport.

Expenditure on transport equipment is a major segment as well, some of which fall under the durable goods category. This includes bicycles, bicycle pumps, motorcycles, scooters, motor cars and other transport equipment. Companies such as Hero, Bajaj, Honda, Maruti, Hyundai, TATA Motors, among others, can count on heavy spending among both rural and urban populaces.

 

Communication Services Could Follow Suit

Among miscellaneous consumer services, expenditure on communication is the highest among both rural and urban households. This includes telecom charges (mobile and landline), courier, postage, money order, Internet, fax and e-mail.

While the Indian telecom market is saturated right now, with several big players (like Vodafone, Airtel, Idea, BSNL, and Reliance) competing fiercely to increase their market share, customers will likely jump ship at the slightest inkling of better reception and data speed.

This could be a huge opportunity for new telecom providers trying to gain a foothold in the market. It’ll also mean existing players will spend heavily to upgrade their existing infrastructure, setting up new cellular towers across several emerging rural or semi-urban population centers, or shoring up existing tower networks among several growing urban customer bases.


e-Commerce Boom Boosts Logistics and Postal Services Sector

Some interesting beneficiaries of India’s Internet connectivity boom are its postal and logistics sectors. With several big players like Amazon, Flipkart, Snapdeal, and eBay in play, In addition, logistic/courier companies and India Post are leveraging the growth in India’s e-Commerce.

The transportation and communication service sectors recorded the highest expenditures among both rural and urban households in India. These segments likely to remain strong over the near future, presenting a lucrative opportunity for companies in the space.


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