It’s often been said that in the United States, consumer spending accounts for two-thirds of economic growth. But we’re not alone – consumer spending is driving India’s exchange traded funds (ETFs) along the path to prosperity.

At one-quarter of the total population, India boasts an impressively strong middle class. Even China can’t touch that.

Unlike China, business profits in India usually end up in the pockets of Indians instead of state-run enterprises, which they in turn spend, spend, spend, explains Gary Gordon for ETF Expert.

Sure, there are some very cheap things Indians are spending money on (think Tata, the world’s least expensive car and Bharti Telecom, which sells the cheapest calling plans). But those companies are reaching a wider consumer base, enticing the poorer Indians to spend. [6 Reasons to Watch India’s ETF.]

Gordon points out that those who see domestic consumption driving investment returns, you may wish to focus on a powerful shopping base of the future. [IMF points out India as bullish.]

For more stories about India, visit our India category.

  • PowerShares India (NYSEArca: PIN)

  • WisdomTree India Earnings (NYSEArca: EPI)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.