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Correspondent

23 August 2024 at 4:29:04 pm

Festive Surge

India’s bazaars have glittered this Diwali with the unmistakable glow of consumer confidence. The country’s festive sales crossed a staggering Rs. 6 lakh crore with goods alone accounting for Rs. 5.4 lakh crore and services contributing Rs. 65,000 crore. More remarkable still, the bulk of this spending flowed through India’s traditional markets rather than e-commerce platforms. After years of economic caution and digital dominance, Indians are once again shopping in person and buying local....

Festive Surge

India’s bazaars have glittered this Diwali with the unmistakable glow of consumer confidence. The country’s festive sales crossed a staggering Rs. 6 lakh crore with goods alone accounting for Rs. 5.4 lakh crore and services contributing Rs. 65,000 crore. More remarkable still, the bulk of this spending flowed through India’s traditional markets rather than e-commerce platforms. After years of economic caution and digital dominance, Indians are once again shopping in person and buying local. This reversal owes much to policy. The recent rationalisation of the Goods and Services Tax (GST) which trimmed rates across categories from garments to home furnishings, has given consumption a timely push. Finance Minister Nirmala Sitharaman’s September rate cuts, combined with income tax relief and easing interest rates, have strengthened household budgets just as inflation softened. The middle class, long squeezed between rising costs and stagnant wages, has found reason to spend again. Retailers report that shoppers filled their bags with everything from lab-grown diamonds and casual wear to consumer durables and décor, blurring the line between necessity and indulgence. The effect has been broad-based. According to Crisil Ratings, 40 organised apparel retailers, who together generate roughly a third of the sector’s revenue, could see growth of 13–14 percent this financial year, aided by a 200-basis-point bump from GST cuts alone. Small traders too have flourished. The Confederation of All India Traders (CAIT) estimates that 85 percent of total festive trade came from non-corporate and traditional markets, a robust comeback for brick-and-mortar retail that had been under siege from online rivals. This surge signals a subtle but significant cultural shift. The “Vocal for Local” and “Swadeshi Diwali” campaigns struck a patriotic chord, with consumers reportedly preferring Indian-made products to imported ones. Demand for Chinese goods fell sharply, while sales of Indian-manufactured products rose by a quarter over last year. For the first time in years, “buying Indian” has become both an act of economic participation and of national pride. The sectoral spread of this boom underlines its breadth. Groceries and fast-moving consumer goods accounted for 12 percent of the total, gold and jewellery 10 percent, and electronics 8 percent. Even traditionally modest categories like home furnishings, décor and confectionery recorded double-digit growth. In the smaller towns that anchor India’s consumption story, traders say stable prices and improved affordability kept registers ringing late into the festive weekend. Yet, much of this buoyancy rests on a fragile equilibrium. Inflation remains contained, and interest rates have been eased, but both could tighten again. Sustaining this spurt will require continued fiscal prudence and regulatory clarity, especially as digital commerce continues to expand its reach. Yet for now, the signs are auspicious. After years of subdued demand and inflationary unease, India’s shoppers appear to have rediscovered their appetite for consumption and their faith in domestic enterprise. The result is not only a record-breaking Diwali, but a reaffirmation of the local marketplace as the heartbeat of India’s economy.

Skyward Consolidation

Updated: Nov 15, 2024

Skyward Consolidation

In a move that reshapes the competitive dynamics of the Indian aviation sector, Tata Group’s Air India (AI) has completed a bumpy merger with Vistara, first announced in 2022. The deal brings together India’s largest international carrier and the high-flying Vistara - once a premium brand backed by Singapore Airlines. The new Air India will now operate over 5,600 weekly flights, connect more than 90 destinations globally, and serve upwards of 120,000 passengers daily. At a time when India’s aviation industry is facing multiple headwinds, this merger is both a strategic consolidation and a test of the Tata Group’s ambitions to build a global aviation powerhouse with an Indian heart.


The Indian aviation sector is arguably the world’s most dynamic, with demand for air travel surging as the country’s middle class expands and business travel picks up. Yet, despite this robust growth, the industry is fraught with challenges that have taken down or forced mergers between some of the country’s most iconic airlines. Kingfisher Airlines, Jet Airways and Air Deccan are just a few of the once-prominent players that faltered under the weight of mounting debts, high operational costs and fierce competition. Even now, Air India itself has struggled to break even, remaining a loss-making venture since its privatization in 2021.


The AI-Vistara merger is the Tata Group’s response to this volatile environment, creating two distinct entities under its wing: a full-service carrier in AI and a low-cost arm in Air India Express. The move seeks to consolidate Tata’s foothold in both the premium and budget segments, an approach aimed at strengthening its competitive edge against the market leader IndiGo, which has dominated with a 60% market share.


The merger holds particular significance in the context of India’s wider aviation infrastructure woes. High fuel prices, inadequate airports and operational inefficiencies have long plagued Indian carriers, contributing to the industry’s financial fragility. Aviation Turbine Fuel (ATF) alone accounts for 40-50% of airline costs, with high taxes further compounding the issue. Moreover, India’s infrastructure, especially its airports and air traffic control systems, are often overstretched, leading to delays, cancellations and customer dissatisfaction. Air India’s own reputation has been tarnished by complaints about poor service, lost luggage, and unreliable flights. In fact, it ranked worst globally for lost baggage in late 2023.


The task ahead for Tata Group is Herculean. Not only must it modernize Air India, mired in decades of bureaucratic inefficiency, but must also ensure that Vistara’s hard-earned reputation for quality service - its flatbed seats, premium economy cabin, and overall superior flying experience - is not lost in the merger. With over 470 aircraft on order, Air India’s combined fleet risks becoming a burden if growth fails to materialize. The rebranding of Vistara’s fleet with Air India’s ‘AI’ prefix is symbolic of the delicate balancing act at play: how to preserve the best aspects of Vistara while transforming Air India into a world-class carrier.

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