India is in a sticky moment, with growth slowing and inflation rising. How are consumers adapting? And what can companies do to ride out the storm? Raj Hosahalli, an expert with Nielsen, a McKinsey partner, suggests some answers in this video and analysis. One surprise: CPG companies can actually benefit.

1. The future is now: India is the world’s seventh-largest car market, with a share of 4% (after China, the US, Japan, Germany, Brazil and France). By 2020, it will likely be third. Small cars account for three-quarters of the car market; every drop in price of 25,000 rupees makes a car affordable to 15 million new households .

2. Growth is strong: Sales rose 17% a year from 2001-10. Still, India has only 11 vehicles per 1,000 people, less than China (47) or Brazil (130). Sales of luxury cars are expected to rise 29% through 2016. On the other end of the economic scale, every drop in price of 25,000 rupees makes a car affordable to 15 million new households

3. Who’s buying? The average buyer is 35 years old, and is in a family of 4 or 5; 17% are in middle or senior management; 10% own a shop or small business; 56% are entrepreneurs.

SOURCES: IHS Global Insight, INFAC, McKinsey

After weeks of angry debate, the Indian government announced on January 11 that foreign companies will be allowed to invest 100% in single-brand retail outlets and chains, up from 51%. That works for branded chains like Starbucks and Gucci—but still excludes stores like Wal-Mart and Carrefour.