At home with new India's growing middle class

British companies are eagerly moving into the market but will need to work harder on brand recognition, writes Peter Hutchinson in Mumbai

Tucked away behind a busy street in south Mumbai stands a smart, clean, and modern apartment block.

In it, lives the Vas family. Austine, 40, and his wife, Philomena, 35. They are typical of India's burgeoning middle class - a group which has exploded in size over the past fifteen years and is responsible for driving what economists call the 'new India'.
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With the Indian retail market now worth £300bn, western multinational companies are all scrambling to gain a slice of this new and extremely profitable source of income.

British businesses from Tesco to Unilever and Mothercare have long-spotted the potential to cash in on India's middle class, as it fuels the rapid expansion of the country's economy.

Yet, little is understood in Britain about how families belonging to this fast growing group live, where they work, how they consume and how they feel about western companies' attempts to sell them non-Indian products. So what makes this demographic tick?

The Daily Telegraph embarked on a spot of business anthropology to find out.

The Vas's flat is tiny compared to the house of a British middle class family of four. There is a modestly sized living room, kitchen, one bedroom and a bathroom. As is common in India the Vas's children, six-year-old Anaita and four-year-old Alden, share their parents' bed - an arrangement which usually lasts until the children are at least ten.

On a table in the lounge lies a copy of The Economic Times. The couple only read English language newspapers and speak the nation's second language all the time at home despite Austine also being fluent in Hindi and three state languages - Kannada, Konkani, and Marathi.

In the corner of the room sits a flashy Samsung high definition television. I am given cola to drink. Embracing non-Indian goods is not a problem for this middle class family.

"As a customer, I look for quality," says Mr Vas passionately. "It doesn't matter which country a product comes from. It's an open-market economy here now and I am not looking for a product from a certain place just because it comes from a rich country.

"What I buy has to be better than what we have here and also be cost effective."

"There was a time when all our industries were protected," he adds. "The products were not as good because companies knew that people still had to buy them. Since the implementation of the free market after 1990 the economy has opened up and products have improved because of competition. We have a choice now and that is good."

However, it appears that British companies have considerable work to do.

The Vas's admit they can't think of any British products they have bought recently. They have never even heard of Tesco, despite the fact that its long-awaited venture into the Indian market was announced

last week.

It was the switch to free market capitalism in the early nineties that was the catalyst for the development and growth of India's middle class.

The speed with which the group is growing shows no sign of abating and the average annual income is expected to rise by 2,500pc to eighteen thousand pounds by 2037.

Mr Vas is a strong example of the aspirational individual that typifies middle class India. "When I arrived in Bombay fifteen years ago I had nothing and nowhere to live so I stayed at the mercy of a friend," he explains.

"I got a job as a teacher and have made a lot of progress since then, as have many of my classmates. The last ten years have given us all a huge boost and I think nearly everyone in India believes that we are one of the world's strongest emerging economies."

Mr Vas teaches history and geography at a respected school called St Mary's not far from his home. His monthly salary as a teacher is 23,000 rupees a month - approximately £283.

It is not enough to raise his family in the comfortable surroundings that he desires so he supplements his teaching income through tutoring ten children at his home, bringing his total monthly salary to 75,000 rupees (£930).

He has seen Mumbai change rapidly since he arrived as a penniless 25-year-old. "Having a television then was a luxury but today they are common. The purchasing power of people has increased greatly, for nearly every family now has a TV. They also have mobile phones as well as a landline number. It wasn't long ago people were using a telegraph service," he says.

"Of course, there are still many people who are poor and don't have even the most basic necessities but you cannot expect the whole country to change within ten years. It takes time."

India has always been thought of as a country of extremes. Extreme poverty has always co-existed with great wealth, however there is now a growing band in the middle.

Around 50pc of Indian's are now estimated to be, or consider themselves to be, middle class.

"The extremes are still there but slowly it is changing. There is a feeling amongst the middle class that it is not just us who need to grow but other groups too. It needs someone to lead though and the question for us in India is 'who will lead?'"

For the moment, aspirational middle class families are leading the way. "It is tremendous to see children reach out and want to become professionals," says Mr Vas.

"The way my children are growing up is radically different from the way I grew up. They have opportunities that I did not have because their father has more money than their grandfather had.

"I hope they become professionals, maybe in the IT or healthcare sectors, or perhaps they become engineers because there is huge scope for infrastructure developments here."

The future for the Vas's children is bright as it is for millions of middle class children across India as families strive to better themselves. For Mr Vas, his biggest concern is the security of the country his children inherit.

He worries about tensions between India and Pakistan, between Hindu extremists and Muslim extremists.

While pessimism over the global economic downturn in the west gets deeper by the week, the Indian middle-class bristles with confidence. despite inflation being at a sixteen-year high of 12.44pc. "This is just short-term," says Mr Vas assuredly.

He is optimistic about the future and will continue striving to better himself. But what will become of Anaita and Alden's sleeping arrangements when they reach ten years of age?

"Ah, by then I will have moved my family to a bigger and better house," he says gleefully.