Demand Analysis - The Indian Market Potential

Since we returned from India one month ago, we have just completed our first analysis on the market potential for the $300 house.

As mentioned in our previous post, our objective is to focus on the economically weaker sections (EWS) of the urban population in India. These households are facing three main issues. First and foremost, as shown on the table below, they have largely been excluded from traditional, affordable housing projects that were focused on the higher income population. Moreover, EWS represent the bulk of urban households facing a housing shortage: approximately 23 million out of the 33 million EWS urban households in India are currently facing housing shortages. Finally, due to their inherent socio-economic difficulties, EWS households are sometimes not even aware of government schemes and programs that could improve their housing conditions.

Based on our analysis, we have estimated the total market potential to be $41 billion in India and           $8 billion in the three states where we will first focus our attention: Maharashtra (excluding Mumbai), Gujarat , and Chhattisgarh.  As with any other market, we have estimated its size by combining the potential volume with the customers' willingness-to-pay (WTP).  Potential volume logically represents the total of EWS households facing house shortage in India (i.e. approx. 23 million), while WTP has been estimated as the average government subsidy that EWS households are entitled to receive under various government schemes such as the Rajiv Aawas Yojana scheme (i.e. approx. Rs. 79,000).

These numbers are based on a preliminary analysis and may change in the future as we refine our work and integrate other information.