India Growth : Value Migration in 2026 and beyond

In his book Value Migration, author Adrian J Slywotzky says, “Value migrates from outmoded business designs to new ones that are better able to satisfy customers’ most important priorities.” Value Migration results in a gradual yet major shift in how the current and future Profit Pool in an industry is shared.

• This is another way of identifying where the profit pool will be. As the famous quote goes :

“I skate to where the puck is going to be, not where it has been.”

If I invest in Titan Industries, Asian Paints, I will get average return. Not because they are not good companies. They are infact great well run companies. But, their hyper growth phase is over. They might give 15, 20 or even 25% annual return (unlikely, law of gravity of company size), but if I want to see big growth, I will have to go beyond where the entire crowd already is.

The Value Migration focus in 2026 and beyond:

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1. The Great Formalization: From “Family Jeweler” to “Trusted Brand”

The biggest migration in the consumer space is the shift from the unorganized (informal) sector to the organized (listed) sector.

• Where is it happening? Jewelry and Footwear.

• Why? Historically, people bought gold from local family jewelers and footwear from unbranded stalls. That is changing fast. Regulatory tightening like :

  • Jewellary : GST and mandatory Hallmarking has made it harder for unorganized players to compete on price by evading taxes. Govt has also put cap on what max transaction can happen in cash
  • Footwear : The Indian government’s introduction of Quality Control Orders (QCOs) and mandatory BIS certification for footwear has acted as a significant supply-side constraint for the unorganized sector. Small manufacturers, who operate on thin margins, find the cost of testing, certification, and compliance prohibitive.

• The Potential:

  • The organized jewelry market share has jumped from ~22% in FY19 to nearly 36–38% in FY25.
  • Value is migrating to big brands (like Titan/Tanishq, Kalyan) that offer trust, transparency, and exchange policies.
  • Similarly, in footwear, aspirational spending is driving consumers toward branded sneakers and away from generic options. Brands like Campus, Sparkx will benefit.

2. The Manufacturing Renaissance: From “Importing” to “Indigenizing”

This is a shift from buying foreign goods to making them at home, driven by the government’s push for self-reliance and the global “China Plus One” strategy.

• Where is it happening? Defense and Electronics (EMS).

• Why?

  • Defense: The government has released “Positive Indigenization Lists,” which essentially ban the import of hundreds of defense items, reserving that market for Indian companies. Value is moving from foreign defense contractors to Indian PSUs and private defense firms.
  • Electronics: We are moving from just assembling phones to making the components. The Electronics Manufacturing Services (EMS) sector is projected to grow at a massive 30% CAGR, reaching $155 billion by 2030.

• The Potential: Companies here aren’t just serving India; they are becoming part of the global supply chain. For example, Indian CDMOs (contract drug manufacturers) are seeing a surge in business as US companies move away from Chinese partners due to the “Biosecure Act”.

3. Financialization: From “Physical Savings” to “Financial Assets”

Indian households are changing how they save money, moving away from physical assets like real estate and gold into financial instruments. There is also a shift from State owned banks to Private sector bank. Sector weight data for Nifty confirms that over the last 15 years, value has steadily migrated from PSU banks to private banks and NBFCs: private banks’ Nifty weight rose to about 24% while PSU banks dropped to around 3% by 2017, and financials overall now dominate the index

• Where is it happening? Banking, Wealth Management, and Fintech.

• Why? The Motilal Oswal study highlights “Financials” as a sector set for explosive expansion. Digital infrastructure like UPI and Account Aggregators has made accessing credit and investing incredibly easy. Insurance is another strong growth area

• The Potential:

  • As the middle class grows, their savings are flowing into mutual funds and equities rather than just bank deposits. This migrates value to banks, asset managers, and stock exchanges (like BSE, which was identified as a top wealth creator).

  • Broking, wealth & advisory platforms: From branch‑centric brokers to low‑cost, app‑based platforms that monetize via volume, float, and ecosystem services.

4. Infrastructure Efficiency: From “Road” to “Rail”

A quiet but massive shift is happening in how goods move across the country.

• Where is it happening? Logistics and Railways.

• Why? The Dedicated Freight Corridors (DFC) are now operational. Rail freight is cheaper and cleaner than road, but it used to be too slow. The DFC has changed that, increasing speed and reliability.

• The Potential: Value is migrating from inefficient long-haul trucking to efficient rail operators. This reduces logistics costs for the whole economy and boosts profits for rail logistics companies and port operators.

5. Healthcare: From “Fragmented” to “Organized” & “Chronic Care”

A dual-migration is occurring in healthcare: consolidation in services and a product shift in pharmaceuticals.

• Where is it happening? Diagnostics, Hospitals, and Pharma.
• Why?
  • Diagnostics: The industry is highly fragmented, but value is migrating from small, standalone labs to large organized diagnostic chains. Patients and doctors increasingly prefer organized players for their reliability and ability to perform complex tests.
  • Pharma Product Mix: The industry is moving from “Volume” (selling simple generics) to “Value” (Innovation, Biosimilars, and Complex Generics). There is a specific shift from Acute therapies (like antibiotics) to Chronic therapies (like cardiac and anti-diabetes drugs) driven by rising lifestyle diseases.
  • Medical Tourism: India is becoming a global hub for medical value travel, with the market expected to reach $8.7 billion in 2025.
• The Potential: Organized diagnostic chains are projected to grow faster than the industry average. In Pharma, companies with a high share of chronic therapies enjoy stickier revenue and better margins compared to those reliant on acute therapies.

Summary Table: The Value Migration Playbook

Area	Migrating FROM	Migrating TO	Key Driver
Retail	Unorganized/Local Shops	Organized Brands (Jewelry, Footwear)	GST, Trust, Premiumization
Defense	Foreign Imports	Domestic Manufacturing	Indigenization Lists, Geopolitics
Finance	Physical Savings/Cash	Equities & Digital Credit	Financialization, UPI
Logistics	Inefficient Road Transport	Dedicated Rail Corridors	Cost Efficiency, Speed