India’s shifting consumption landscape – a growing footprint

As India races toward becoming a $5 trillion economy, the contours of consumption are evolving—both in depth and direction. The CMS Consumption Report 2025, drawn from CMS Info Systems’ proprietary data, offers a front-row seat to this transformation, revealing how cash-led consumption continues to drive growth across sectors, states, and cities.

A Nation in Consumption Mode

FY25 marks a decisive shift in consumer behaviour. Indian households, buoyed by rising disposable incomes and a GDP per capita breaching the $2,000 mark, are pivoting away from experience-led spending to product-centric consumption. CMS data highlights this transition, with Consumer Durables, Multi-brand Outlets, and FMCG emerging as the top three cash-led retail sectors this year—replacing FY24’s Media & Entertainment, FMCG, and Consumer Durables mix.

This shift signals a reversion to pre-pandemic consumption patterns, where immediacy and product ownership take precedence over experiences. A sharp 72% rise in spending on Consumer Durables points to a deeper trend: Indian consumers are investing in quality-of-life improvements—from home appliances to furniture—driven partly by a historic boom in homeownership. Residential sales in India hit an all-time high in 2024, growing by 11% YoY, further catalyzing durable goods demand.

Cash-Led Growth, State by State

Geographically, the consumption story is just as dynamic. While wealthier states and UTs naturally lead in gross spending, the top growth hotspots have shifted. In FY25, Bihar, New Delhi, and Uttar Pradesh emerged as the top three in YoY growth of average cash dispensed per ATM, signaling deeper consumption penetration in previously underrepresented areas.

Compared to FY24’s leaders—New Delhi, Tamil Nadu, and Uttar Pradesh—FY25 reflects a broader, more inclusive consumption base. States like Himachal Pradesh and Chhattisgarh are also seeing notable growth, indicating that India’s consumption engine is no longer restricted to urban centers or traditionally affluent regions.

This rotation of consumption hotspots year-on-year reflects a vibrant and fast-maturing economy—one where the aspirations of Tier 2 and Tier 3 India are finding expression through accessible retail and financial infrastructure.

Quick Commerce Rising, E-commerce Realigning

One of the most telling shifts in FY25 is the 10% growth in Quick Commerce—a new entrant to the consumption basket—contrasting starkly with a 17% decline in E-commerce. Consumers are signaling a preference for convenience and instant gratification. With delivery windows narrowing to 30 minutes and hyperlocal fulfilment becoming the norm, Quick Commerce is reshaping last-mile retail. Simultaneously, organized brick-and-mortar formats, including Multi-brand Outlets, have staged a strong comeback, growing by 12% in FY25.

The Persistent Power of Cash

Despite the surge in digital transactions, cash remains the lifeblood of Indian consumption, especially for small-ticket and rural transactions. CMS data shows that cash continues to account for 60% of all consumer expenditure as of March 2024, supported by a robust ATM and bank branch network built over the past decade.

Between FY14 and FY24:

1. Currency in Circulation increased by 157%
2. ATMs grew by 32%
3. Bank branches expanded by 36%

The increase in average ticket size (ATS) of ATM withdrawals—from INR 5,513 in FY24 to INR 5,658 in FY25 (3% YoY growth)—underscores the continued reliance on cash for meaningful transactions. In contrast, the ATS of UPI transactions declined by 8% between H1 2023 and H1 2024. Person-to-merchant UPI transactions also saw a 4% drop in ATS, reinforcing that while digital is growing in frequency, cash is still king for larger, planned expenditures.

Sector Snapshot: Where the Money Is Going

1. Consumer Durables: Sector spending surged 72%, driven by rising homeownership and a shift to long-term investments in household goods.
2. Multi-brand Outlets: Rebounded from a -29% decline in FY24 to a 12% increase in FY25, reflecting renewed consumer confidence in premium, in-person retail.
3. FMCG: Continued its steady recovery with 4% growth in FY25, signaling stable, needs-based consumption supported by rising per capita income.

Interestingly, non-discretionary spends fell by 0.39%, and discretionary spending declined by 3.5%, hinting at smarter, value-driven purchases rather than across-the-board inflationary consumption.

The Tale of Two Indias: Cash & Digital

India’s consumption economy is balancing between two parallel tracks—digital convenience and cash resilience. The former is growing through fintech innovation, while the latter is thriving on physical accessibility, behavioral preference, and familiarity. Both ecosystems are coexisting and complementing each other, rather than competing.

The ATM, far from becoming obsolete, remains a critical consumer touchpoint. With an average monthly withdrawal value per ATM increasing to INR 1.30 Cr in FY25 (from INR 1.02 Cr in FY17), the role of ATMs in fueling grassroots consumption is clearer than ever.

Final Thoughts

India’s consumption story is not just an urban or digital tale. It’s a layered, diverse, and rapidly evolving narrative that spans sectors, states, and social strata. The CMS Consumption Report 2025 reveals a strong undercurrent of optimism powered by rising incomes, expanding infrastructure, and a consumer who is both aspirational and grounded.

As brands, policymakers, and investors look to tap into this momentum, the key will be to build for “Bharat and India” alike—respecting cash’s continued role while accelerating digital pathways. Because in the India of 2025, consumption is not just a trend; it’s a transformation.