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2026.03.24
In 2023, India overtook China to become the world's most populous country. Its population as of 2025 is about 1.46 billion, and it is projected to reach 1.48 billion by 2026. Accounting for about 17.8% of the world's population, why did India become such a population giant? This article explains the historical background, the characteristics of its population structure, and the future outlook, with an eye toward the business perspective of Japanese companies.
At the root of India's population growth lies a tradition of agrarian society spanning thousands of years. The extended family system, in which having many children was economically rational to secure agricultural labor, formed the foundation for population growth. Under the influence of Hinduism and Islam, children were regarded as a "blessing from God," creating a cultural climate that encouraged high birth rates.
Modern medicine and improved public health introduced under British rule (1858-1947) lowered the death rate. Meanwhile, the birth rate remained high, causing the population to begin growing rapidly. This second stage of the "demographic transition" (high birth rate, low death rate) marked the starting point of the population explosion that continues to this day.
After independence in 1947, the Indian government focused on improving public health, expanding vaccination, and increasing food production (the Green Revolution), which greatly reduced infant mortality and deaths from famine. The population grew from 360 million in 1951 to 840 million in 1991, more than doubling in just 40 years.
India's median age is 29.2, about 20 years younger than Japan's 49.1. The working-age population, aged 15-64, accounts for 67% of the total, putting India in the midst of the world's largest "demographic dividend" period. About 52,000 babies are born every day, and the population continues to grow naturally by about 19 million per year.
The population is not distributed evenly across India. Uttar Pradesh (about 230 million), Maharashtra (about 130 million), and Bihar (about 130 million) have the largest populations, while Northeast India and the island territories have relatively small populations. This regional disparity has a direct bearing on how companies select their target markets.
India's urban population ratio is about 36% (about 530 million people), still low compared with developed countries. However, migration from rural to urban areas is accelerating, and the urban population is expected to exceed 600 million by 2030. In addition to megacities such as Delhi, Mumbai, Bengaluru, Hyderabad, and Chennai, Tier 2 and Tier 3 cities are growing remarkably, making urbanization one of the biggest drivers of India's economy.
India's working-age population is about 980 million, with about 12 million young people entering the labor market each year. This enormous workforce is a driving force for economic growth across a wide range of fields, from manufacturing to the IT industry. In the IT and BPO industries in particular, young people educated in English and STEM subjects form an abundant talent pool.
A population of 1.46 billion also means 1.46 billion consumers. The growth of the middle class (estimated at 400-500 million), rising smartphone penetration (more than 700 million users), and the rapid growth of the e-commerce market are all trends underpinned by the sheer size of the population. India's consumer market is projected to become the world's third-largest by 2030.
India's birth rate is on a downward trend, with a total fertility rate of about 2.0 in 2025, already below the replacement level of 2.1. The demographic dividend is expected to continue until around 2050, but the challenge is whether enough jobs can be created and education and skills development advanced before then. In southern states such as Kerala and Tamil Nadu, birth rates have already fallen to levels comparable with developed countries, and early signs of future aging are beginning to appear.
About 50% of India's population is 25 or younger, and Gen Z and millennials are the main force in the consumer market. As digital natives, this generation uses services such as e-commerce, social media, food delivery, and OTT streaming as part of daily life, and is open to new brands and products.
Population growth means expanding demand for healthcare. India's healthcare market reached about 372 billion dollars in 2023 and is expected to expand to about 638 billion dollars by 2025. A massive market proportional to the population is forming around hospitals, pharmaceuticals, medical devices, digital health, and preventive care.
With 12 million people entering the labour market every year, India has enormous demand for education and vocational training. India has the world’s second-largest EdTech market, and platforms such as Unacademy, upGrad, and PhysicsWallah are growing (Byju’s, once the biggest of them, entered insolvency proceedings in 2024). For Japanese companies, the openings are in skills training, training for manufacturing, and Japanese-language teaching.
India's middle class, reaching 400-500 million people, is a key target for Japanese companies. For this segment, which seeks high-quality but affordably priced products, a "value for money" strategy of offering Japanese quality at Indian prices is effective.
While India's demographic dividend continues, Japanese companies should build a long-term talent pipeline. Industry-academia collaboration with Indian universities, use of study-in-Japan programs, and investment in local talent development are directly linked to future competitiveness.
The growth of Tier 2 and Tier 3 cities represents a new market-development opportunity for Japanese companies. With less competition than in major cities and an easier path to first-mover advantage, these cities are the next frontier for consumer goods, retail, food, and service industries.
The historical factors behind India becoming the world's most populous country include the tradition of agrarian society, medical improvements during the colonial era, and advances in public health after independence. Today's population of 1.46 billion is generating enormous business opportunities through its young median age of 29.2, its working-age population of 980 million, and its expanding middle class. The roughly 25 years until 2050, while the demographic dividend continues, will be the most critical period for Japanese companies to build a solid position in the Indian market. What is required is to correctly read the demographic trends and strategically pursue middle-class targeting, securing talent, and developing Tier 2 cities.
The tradition of the extended family system in an agrarian society is the foundation. As modern medicine and improved public health lowered the death rate, the birth rate remained high, causing the population to surge. After independence, the spread of vaccination and increased food production from the Green Revolution further drove population growth.
It refers to a state in which the working-age population accounts for a large share of the total, with the labor force pushing up economic growth. India's median age is young, and large numbers of young people enter the labor market every year. This demographic dividend period is expected to continue for some time.
No, there are regional differences. States such as Uttar Pradesh, Maharashtra, and Bihar have especially large populations, while Northeast India and the island territories have small populations. This regional disparity has a direct bearing on decisions about where to target the market.
It creates opportunities both as a huge consumer market and as a labor pool. The growth of the middle class, rising smartphone penetration, and the growth of e-commerce are all trends underpinned by population size. In addition, markets such as healthcare and EdTech are expanding in proportion to the population.
The birth rate is declining, with a total fertility rate of about 2.0, already below the replacement level of 2.1. In some southern states, it has already fallen significantly, and early signs of future aging are appearing. The challenge is whether job creation and skills development can be advanced while the demographic dividend continues.
It is effective to treat the middle class, estimated at several hundred million people, as the volume zone and pursue a value strategy of delivering Japanese quality at Indian prices. It is also advisable to plan systematically for building a long-term talent pipeline through industry-academia collaboration and local talent development, and for developing Tier 2 and Tier 3 cities where competition is limited.
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