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India’s retailers are facing a strange problem in 2026.
Entry level consumers are cutting back on discretionary spending, mass demand is slowing, and brands are leaning harder into premium products to protect margins. But at the same time, one group continues to punch far above its weight. Gen Z.
According to the latest BCG and Snap Inc research, Gen Z already accounts for about 43% of India’s discretionary spending and is on track to control nearly half of it by 2035. That is not a projection built on vibes. It is backed by hard numbers. And it explains why brands are obsessed with 20 year olds who still live with their parents.
Let’s start with the scale. India’s consumer economy is massive and fragmented. In fashion and lifestyle alone, annual consumption sits at roughly $100-$110 billion. Gen Z drives about 47% of that. That means between $45 and $50 billion in this category is either directly spent or heavily influenced by people born after the mid 1990s.
Travel and vacations are even bigger at $160- 180 billion annually, with Gen Z driving 47% there too, translating to roughly $75-80 billion.
Eating out and ordering in, a $70-$75 billion market, sees the highest share at 48%, or around $30- $35 billion.
Even in packaged food and beverages, a category many assume is family driven, Gen Z accounts for about 45% of the $70- $75 billion market.
Beauty and personal care stands at $15- $20 billion, with 44% linked to Gen Z. Consumer tech devices such as smartphones and laptops total about $45- $50 billion, with 45% driven by them. OTT video may be smaller at $0.5- $1 billion, but Gen Z still drives close to half of it.
Put that together and you see the pattern. Across most discretionary categories, Gen Z influence sits between 44 -48%. That is dominance territory.
And remember, Gen Z makes up roughly 27% of India’s population. So a little over one fourth of the population is influencing nearly half the discretionary wallet.
BCG also estimates Gen Z’s total direct and influenced spending in India could reach $2 trillion by 2035. Every second rupee of discretionary consumption could be shaped by this cohort. That is why brands are redesigning stores, rethinking marketing, and obsessing over short form content. If you ignore Gen Z, you are basically ignoring the future revenue line.
The latest ET Snapchat Gen Z Index suggests this generation is not as reckless as stereotypes suggest. Young Indians are increasingly choosing stable income over risky career bets. They value early savings, financial security and work life balance. So while they are driving spending, they are also tracking every rupee on UPI, chasing cashback offers and thinking twice before big splurges. It is a calculated consumption.
At the same time, there is a caution flag. Reports indicate rising loan uptake among young earners with relatively modest salaries. There are cases of high credit exposure, cheque bounces and repayment stress. So while the spending engine is strong, parts of it are debt fuelled.
Moreover, studies suggest Gen Z teens and young adults are primary influencers for family purchases. From smartphones to packaged foods to travel plans, parents increasingly ask their kids what to buy. Some researchers call them the reverse generation because influence flows upward. So even when they are not paying, they are deciding.
Retailers are noticing something else. Mass consumption in lower income segments has slowed. Entry level buyers are cautious. To maintain growth, brands are premiumising and targeting aspirational consumers. Guess who fits that profile. Urban Gen Z with disposable income and digital exposure. This generation is comfortable paying more for brands that signal identity, sustainability or exclusivity. They will spend 2,000 rupees on sneakers without blinking but demand authenticity in return.
So the story is layered. Gen Z is driving between 44 and 48 percent of major discretionary categories that collectively run into hundreds of billions of dollars. They are expected to shape up to $2 trillion in spending over the next decade. They influence household decisions beyond their own wallets. They prefer experiences like travel and eating out. They are digital first and financially aware. But parts of this spending wave are sitting on rising personal credit.
For businesses, the message is clear. This is not a niche audience. It is the core growth engine of India’s consumer economy. For policymakers and lenders, the message is slightly different. Monitor debt, encourage financial literacy, and ensure the engine does not overheat.
And for the rest of us, the next time you see a brand launch built around short videos, pop culture drops or limited edition collabs, just remember. It is not random. It is the math.
