India 1, India 2, India 3: who actually buys

If you are building a consumer product in India, the most expensive mistake you can make is believing you are selling to 1.4 billion people. You are not. You are almost certainly selling to about a tenth of them — and knowing exactly which tenth changes your pricing, your packaging, your channel and your first hire.

This is the India 1, India 2, India 3 framework: the single most useful mental model for anyone building a brand here. This piece lays out the framework, the current numbers, and — the part most summaries skip — what you actually do with it on Monday morning.

Where the framework comes from

The India 1/2/3 segmentation traces to **Kishore Biyani's 2007 book *It Happened in India***. Sajith Pai at Blume Ventures quantified it and brought it to the startup world — first in a June 2018 essay, then annually in Blume's Indus Valley Annual Report from 2022. Pai's essay cites Biyani directly.

Biyani, who originated it, is on this episode. At 53:59 he says: "this 10-12 crore people can be represented as what I say India 1."

What the podcast added was texture. On Episode 11 of Nikhil Kamath's WTF podcast, Kishore Biyani — who built Big Bazaar and spent decades reading Indian shoppers at the shelf — took the framework further and sub-segmented India 1 itself. That refinement is where this gets genuinely useful, and we will come to it.

The three Indias, in numbers

Start with the shape of the thing.

• India 1 — roughly 120–140 million people, about 10% of the population. Per-capita income of around US$15,000 — comparable to Mexico's — per Blume's Indus Valley Annual Report 2025. Effectively English-native, digitally fluent, and responsible for the bulk of discretionary spending. This is who almost every Indian startup is actually selling to.
• India 2 — the large aspirational middle. Biyani's practical definition on the podcast: for every one India 1 person there are roughly three to three and a half India 2s — in his words, "the drivers, the helpers, the maids, the watchmen, the liftmans." Rising incomes, real ambition, but far less discretionary room.
• India 3 — subsistence. Farm labour and government support. Consumption is need-based, not brand-led.

Biyani offered one statistic on the show that reframes everything: over a lifetime, India 1 consumes on the order of 100,000 distinct items, India 2 around 10,000, and India 3 around 1,000. These are his own working estimates, offered in conversation — he says only that "we did some analysis" and does not name a source. The orders of magnitude are the point. The gap between the segments is not 20% or 50%. It is 10x, twice over.

The country inside the country

Here is the part that makes India 1 tractable rather than intimidating. Biyani argued that India 1 is not one market either. Inside it sit three recognisable countries:

• A Singapore — roughly 6 million people at the top, with household incomes he put in the region of ₹60 lakh and above. Global tastes, global reference prices, buying the same brands as Dubai or London.
• A Poland — roughly 25–30 million people with household incomes he estimated around ₹20–25 lakh. Comfortable, brand-aware, premium-capable but price-conscious.
• A Mexico — roughly 70–80 million people, household incomes around ₹12–15 lakh. This is the bulk of India 1, and the segment most Indian D2C brands — direct-to-consumer, meaning they sell straight to the buyer rather than through a shop — are genuinely built for.

These bands are Biyani's estimates offered in conversation, not published research, and you should treat the exact rupee figures as directional. But the structural insight is sound and it is actionable: “targeting India 1” is still too broad a brief. A brand built for the Singapore layer and a brand built for the Mexico layer share a country and almost nothing else — not price architecture, not channel, not creative.

The useful question is not “how big is my market?” It is “which of the three countries inside India 1 am I building for, and can I name five people in it?”

The categories India 1 quietly owns

Biyani cited research he did not name, and the concentration is severe. By value, India 1 accounts for roughly:

• 70%+ of packaged FMCG consumption
• ~85% of beauty
• ~78% of eating out
• 60–70% of fruit

Read that beauty number again. If you are building a skincare or cosmetics brand, roughly six out of every seven rupees in your category are spent by one-tenth of the population. Every decision — ingredient claims, price point, the language on the pack — should be aimed there.

The trap: India 1 is not getting bigger

On the podcast, Biyani made a claim that founders consistently get wrong. India 1 grows by roughly 1% a year in headcount. Blume's own reporting echoes this: pockets are getting deeper, but the volume of India 1 is not expanding much.

What is growing is depth: the same households buying more categories, more often, at higher price points. Biyani put India 1's annual consumption in the region of US$800 billion, growing comfortably in double digits.

That has a direct strategic consequence:

• If you assume the segment is expanding, you build an acquisition machine and burn cash chasing customers who do not exist yet.
• If you accept the segment is fixed, you build for share of basket — repeat rate, adjacent categories, higher AOV. That is a fundamentally different company.

Raj Shamani's refinement: the three Indias live in one house

The sharpest correction on the episode came from Raj Shamani, and it is the detail that turns a macro chart into a product decision. He argued the segments are not purely about income — they are about awareness and choice. His example, from his own family:

• His father uses a single soap for hair, face and body — perhaps 25–30 products in regular rotation.
• He himself uses a face wash, a shampoo and a body wash.
• His brother runs a ten-step routine — shampoo, conditioner, face wash, scrub, and more.

Same household. Same income. Three completely different consumers. The number of SKUs — individual products, each size and variant counted separately — a person is willing to hold in their life is driven as much by exposure and category education as by their bank balance.

For founders this is liberating, because category education is something you can actually influence. You cannot raise a customer's income. You can absolutely teach them that the step between cleanser and moisturiser exists, and that it is worth ₹600.

Once you know which India you are selling to, the next question is what to sell them. Our guide to finding gaps people already search for picks up there, and how to name what you build covers the decision after that.

What this means for your business, concretely

1. Your gross margin decides your segment

Both Ananth Narayanan and Biyani converged on this: to build a real brand you need 40–60% gross margins minimum. Biyani's rule of thumb for what counts as value-added consumption: you should be selling at more than three times your landed cost. Below that, you are running a distribution business wearing a brand's clothes.

Narayanan gave the category benchmarks from Mensa's portfolio: fashion around 55–60% gross margin, beauty 70–80%. If your category cannot clear 40%, the India 1 playbook does not apply to you and you need a volume model instead.

2. Geography is more concentrated than you think

India 1 is not a metro phenomenon, but it is a top-100-cities phenomenon. Narayanan added an important counterpoint from his Myntra years: premium products often sold surprisingly well in smaller cities — Polo Ralph Lauren moving in Nellore and Chittoor. Individually small, collectively meaningful.

The practical read: build for the top 100 cities, not the top 8, but do not expect any single tier-2 city to carry you.

3. They are all online, even when they buy offline

Narayanan's estimate on the show was that essentially all of India 1 is online, whether or not they transact there. Biyani added that UPI penetration runs well ahead of credit cards.

That gap has widened enormously since the episode aired. As of July 2026, UPI processed 23.66 billion transactions worth ₹29.88 lakh crore in a single month — an all-time high, per NPCI data, with growth increasingly coming from outside the metros. Payment friction is no longer a reason a brand fails in India.

Running it through the value equation

Alex Hormozi frames value as dream outcome × perceived likelihood of success, divided by time delay × effort. The India 1/2/3 lens sharpens every term — because all four are segment-specific:

• Dream outcome in the Singapore layer is global-standard quality. In the Mexico layer it is often visible upgrade at a defensible price.
• Likelihood is proven by different evidence: international certification at the top, peer reviews and word of mouth in the middle.
• Time delay and effort mean different things when one segment expects same-day delivery and another accepts three days for a better price.

Write your offer for the wrong layer and every single term degrades at once. That is why undifferentiated “premium for India” positioning fails so reliably.

The Cialdini angle is just as segment-bound. Social proof only works within a reference group — testimonials from the Singapore layer do not move the Mexico layer, and can actively alienate it. If you want the mechanics, we wrote about that in Cialdini for founders.

A checklist you can use this week

1. Name the layer. Singapore, Poland or Mexico — pick one and write it down.
2. Name five real people in it. If you cannot, you do not know your customer yet.
3. Check your gross margin against 40–60%. If you fail, change the category or the model, not the marketing.
4. Audit your creative. Does it signal to the layer you chose, or to the one you personally belong to? Founders default to their own layer constantly.
5. Decide: share of basket or new customers. India 1 barely grows in headcount — so plan for depth.
6. Find the education gap. Which step in your customer's routine does not exist yet? That is your addition category.

The honest caveat

The podcast figures above are estimates given in conversation by experienced operators — not audited statistics, and now nearly three years old. Blume's Indus Valley Annual Report is the primary source for the framework and is updated annually; the 2025 edition is the most recent published at the time of writing. Treat the structure as durable and the specific rupee bands as directional.

But the core insight has not aged at all: India is not one market, the buying power is concentrated far more narrowly than the population suggests, and the founders who win here are the ones who pick a layer and go deep rather than pointing at a billion people and hoping.

Source: [WTF is with Nikhil Kamath, Episode 11](https://www.youtube.com/watch?v=hjiZ11lKCrU) — "WTF Goes into Building a Fashion, Beauty, or Home Brand?", published 7 October 2023.

On the episode: [Nikhil Kamath](/en/founders/nikhil-kamath/) with [Ananth Narayanan](/en/founders/ananth-narayanan/) ([Mensa Brands](/en/companies/mensa-brands/), formerly Myntra), [Kishore Biyani](/en/founders/kishore-biyani/) ([Future Group](/en/companies/future-group/), Big Bazaar) and [Raj Shamani](/en/founders/raj-shamani/) ([House of X](/en/companies/house-of-x/)).

Quotes are attributed to the speaker and checked against the recording. Independent figures are sourced and dated separately.