I just read, with great pleasure, the newly released Blume Ventures report on India. The report has been widely discussed amongst friends of Momentum Works, and probably generated some controversy.

Amongst many other interesting concepts, the report divides India’s consumers into three categories:

  1. “India 1: Mexico” – “the Consuming Class” – 140m people with US$15k income per capita; 
  2. “India 2: Indonesia” – “the Aspirant Class” – 300m people with US$3k income per capita; 
  3. “India 3: Sub Saharan Africa ” – “Unometisable Users (& Non-Users)”- 1b people with ~$1k income per capita. 

Media reports typically focus on two areas of the report:

  1. A billion people in India have no discretionary spending power (as above) 
  2. Quick commerce will struggle to maintain current growth 

A few quick thoughts here: 

  1. Back in 2016, I had a very interesting chat with a veteran VC investor (2 decades my senior) in Bangalore. He told me that to project the real TAM in India, the most important statistic to look into was the ‘employment growth’ in formal sectors. To see the gap between that and what many startups and VCs wanted to believe, divide that statistic by the number of young adults entering work age every year. Similar points were made in the Blume report;
  2. The report also rightly points out that India’s manufacturing “punches well below its ideal weight”. Repeated discussions with ecommerce, logistics, quick commerce and consumer brand players in China all told the same thing: “manufacturing” and “industrial belts” enabled these sectors to boom in China. Supply of quality industrial and consumer goods would unleash the real potential of that in India – and create stable-paying jobs that turn “India 3” consumers into “India 2” consumers. This requires infrastructure development and consistent commitment from the government;
  3. Mexico + Indonesia = a very large opportunity for consumer tech companies indeed. But it is not big enough to create a self-sustaining industrial-tech complex. I believe leading companies in India’s tech sector see this very clearly, and adapt their strategies for the specific market conditions;
  4. We are all watching with delight the achievement of quick commerce in India – and the Blume report did a good job summarising the enabling factors. was surprised, however, recently to discover that all leading quick commerce platforms in China have studied Zomato really hard. Also, leading quick commerce platforms in China are all supply chain companies – some food for thought here;
  5. You can also read one of the first articles on TheLowDown, Momentum Works blog, called “Global internet giants – Only American, Chinese, and maybe Indian” for some of our earlier thoughts.
  6. A few Indian friends recently asked me about DeepSeek and how India could build something similar. Here I would like to share a discussion I had a year ago with a good friend who is CTO of a leading AI company: “Someone in China will eventually build something as good as ChatGPT – but not the venture funded ones. I think it would more likely be one of those geeks doing either crypto mining or other business, who have amassed a lot of compute and who want to build AI using this compute.”