Dynamic Gen Z Cohort Reshaping India’s Economic Landscape

With over 377 million individuals, Generation Z (Gen Z) is now the largest generation to ever live in India. Far from being a homogeneous group, this younger and dynamic cohort is reshaping the economic landscape of the country with its rising spending power coupled with unique perspectives. Driven by entrepreneurial mindset, they are proving to be a trailblazers of societal change, propelling India’s rise as a global giant.

A report by Snap Inc. and Boston Consulting Group (BCG) titled ‘The USD 2 Trillion Opportunity: How Gen Z is Shaping the New India’ says that Gen Z’s Collective spending power reaches an impressive ISD 860 billion, surging to USD 2 trillion by 2035. With one in every four Gen Z are already in the workforce, by 2025 every second Gen Z will be earning, the Indian economy is set to leverage this exciting phase.

USD 2 Billion Spending Power

In modern context, the Gen Z population in not just influencing the market, they are redefining it in their own way. To put things in perspective, numbers play a decisive role. Spending power somewhat fulfils that criteria in this regard. The report from Snap Inc. and BCG revealed that the collective spending power of Gen Z in the country stands at an impressive USD 860 billion, which constitutes 43 per cent of the nation’s total consumption. What promises the most is the fact that it is expected to reach USD 2 trillion by 2035.

“Gen Z is already driving 43 per cent of India’s consumer spending. Their influence is not limited to select categories – it cuts across categories ranging from fashion, eating out, to automobiles and consumer durables,” said Nimisha Jain, Senior Partner and Managing Director at BCG India.

Distribution Of Gen Z’s Spending Power

As far as the distribution of the spending is concerned, out of Gen Z’s total spending power of USD 860 billion, approximately USD 200 billion is contributed through direct spending, which is the money that they earn and spend themselves. The rest USD 660 billion is termed as ‘influenced spending’, which simply includes the purchases influenced by their recommendations or preferences.

The trends for the future suggest that Gen Z will drive every second rupee of consumer spend by the year 2035. By then, the figure for the direct spending will reach USD 1.8 trillion. The further distribution of the spending reveal that this dynamic cohort is influencing the spending across sectors, industries and categories, such as 48 per cent on dining, 47 per cent on fashion and lifestyle, 50 per cent of total spending on footwear and many more.

Gen Z’s Evolving Economic Role

Gen Z’s participation in India’s economy has transformed significantly over the years. Initially viewed as a tech-savvy generation of consumers, they’ve quickly evolved into active contributors who are shaping industries in new ways. Initially, this generation (born between 1997-2012) was primarily focused on education, with limited participation in the workforce. Their impact is particularly visible in the digital economy, with over 60 per cent of Gen Z in India actively participating in ecommerce and social media-driven businesses.

“Today, one in four Gen Z individuals are part of the workforce, bringing fresh ideas and entrepreneurial energy into sectors like technology, media, and ecommerce. What sets them apart is their drive for purpose and innovation. They’re not just searching for jobs—they’re building them. Gen Z is launching startups and carving out career paths that reflect their values, reshaping what work means and transforming the economy along the way,” stated Nischal Narayanam, Founder and Mentor, nischals.

The Tilt Towards Gig Economy

As a healthy portion of Gen Z population in the country is actively participating in ecommerce and social media-driven businesses, there is another significant trend which is making the headlines. According to a 2022 EY report, around 35 per cent of Indian Gen Z involved in some form of business or gig economy work.

“This generation is also leading the charge in the gig economy, with over 50 per cent of them expressing interest in freelance work, thus enhancing flexibility and productivity in the workforce. This generation values the opportunity to diversify their income streams, making gig work and moonlighting appealing alternatives to traditional nine-to-five jobs. Gen Z is increasingly turning to platforms like Upwork, Uber, and Fiverr to earn outside of their primary employment,” added Ankita Bhardwaj, who is an Assistant Professor and Program Chairperson for the School of Commerce, Narsee Monjee Institute of Management Studies (Chandigarh).

Gen Z’s Neglect By Businesses

Even after their undeniable influence on the Indian economy, there still exists a gap between recognition and action. The Snap Inc. and BCG report shed light on this very aspect as it revealed that around 45 per cent of businesses acknowledge the potential of Gen Z, only 15 per cent of them attempted to reap the benefits of this workforce. The experts have called out this concerning trend and have advocated for having a more enhanced focus on skill development to prevent further neglect.

“First, there needs to be a stronger emphasis on skill development. With industries rapidly evolving, Gen Z must be equipped with skills that match the demands of the future economy, such as coding, data analytics, and digital marketing. Public-private partnerships can help bridge this gap through targeted educational programs and internships,” added Bhardwaj.

Leading Charge In Family Travel Planning

As Gen Z population is influencing the decisions across categories and sectors, one such domain is the family travel planning. With their distinct preferences, they are proving to be the primary travel planners in their families. In Asia Pacific, family travel is getting influenced by the likings and preferences of the Gen Alpha and Gen Z.

Hilton’s 2025 Trends Report titled ‘Small Voices, Big Choices’ has revealed that In India, 93 per cent of young travellers actively contribute to their family’s vacation planning. Moreover, 76 per cent of Indian parents (compared to 70 per cent globally) choose vacation destinations based on their children’s interests.

In what is proving to be a major boost for the Indian economy, these young travellers are averaging two to three trips annually, with 94 per cent of them travelling at least once.

Hurdles In The Long Run

While the positive prospects for the future might appear shiny, there are still some areas which could prove to be major hurdles in the longer run and could apply brakes to the cruising growth chariot. A significant hurdle is the lack of clear career paths, which can lead to disconnection from their roles in the economy. Financial literacy, the inclination towards gig-economy, skill mismatch are few areas which demand attention.

“India must create a more favourable environment for startups, providing Gen Z with access to funding, mentorship, and regulatory support. Tailored educational curriculums to match the needs of emerging sectors like AI, blockchain, data science, and renewable energy. Encourage vocational training and hands-on experience to reduce the gap between academic qualifications and industry requirements,” added Bhardwaj.

Emphasising the need for fostering a strong sense of community will enhance collaboration, Narayanam stated, “Aligning business values with Gen Z's focus on authenticity and social responsibility will not only attract talent but also stimulate innovation. Although Gen Z are digital natives, targeted training can help bridge skill gaps, empowering them to actively drive economic growth”.

As the rapidly growing influence of Gen Z population is reshaping the economic landscape of the country, there exists a vast gallery of opportunities that could boost India’s efforts to strengthen its position as a global giant. Gen Z’s rising spending power will help the economy tap areas across categories in the longer run.