Equated monthly instalments (EMIs) require a consumer to pay off a fixed amount each month that covers both the principal sum and any interest charged. Analysts have likened its growth to the sachet revolution in the FMCG market.
"FMCG did a tremendous service by launching smaller packs to offer access to branded products," Sraboni Bhaduri, consultant brand strategist at IMRB's Probe Qualitative Research, told Livemint.
She noted that certain price points were important in fuelling demand among the lower socio-economic groups. "EMIs similarly split up the cost and make products and services reachable," she explained.
Earlier this year, Apple announced its intention to tackle the issue of affordability with a 12-month payment plan. Livemint noted that iPhones have suddenly become commonplace in urban India.
Rival Samsung also offers EMI schemes of between three and 12 months for its smartphones and tablets.
"The EMI offers serve as a good trigger for consumers to upgrade and drive sales of the higher priced models by making them more affordable," said Asim Warsi, vice-president (sales) for mobile business at Samsung India.
But EMIs appear to be rewriting the whole notion of affordability, as Nilesh Gupta, managing partner of Vijay Sales, a consumer durables merchant, noted.
"If a consumer has a budget of Rs.15,000 for a mobile phone, he won't bat an eyelid to double this budget to Rs.30,000 if there is an easy EMI scheme available on credit cards," he said.
As well as consumer electronics, EMIs are now being offered on airline tickets, jewellery, clothing, gym memberships and hair transplants.
The ecommerce sector has also benefited, with the COO of one site, Homeshop18.com, observing that "We've seen youngsters using EMIs very aggressively".
India is turning into an EMI nation, said Bhaduri, as consumers no longer save up to buy items. "We are a nation in a hurry. We want everything now," she said.
Data sourced from LIvemint; additional content by Warc staff