By Erick Yes I know that’s not what EMI stands for. But what online shopping platforms are doing is making it easier for you to buy things you don’t need with money you don’t have. And make you pay more for it later.
Some Basic EMI related Statistics
Yes, there is a clear trend of Indian consumers increasingly relying on EMI (Equated Monthly Installments) for electronics purchases, accompanied by rising default rates. Household debt has reached alarming levels at 41.9% of GDP as of December 2024, with consumption-led lending, particularly for electronics and consumer durables, showing both rapid growth and concerning default patterns.
From Financial Express: Non-housing retail loans, mostly used for consumption purposes, formed 54.9% of the total household debt as of March 2025. The share of these loans has been consistently growing over the years, and their growth has outpaced that of housing, agriculture and business loans, said the report.
From Business Standard: Borrowing for smartphones and home appliances has skyrocketed to 37% in 2024, a massive leap from just 1% in 2020, revealed a study titled latest study ‘How India Borrows 2024’ by Home Credit India.
Here are some other relevant stats:
- Credit card defaults rose to 1.8% in June 2024 from 1.7% at the end of 2023 and 1.6% in March 2023
- Outstanding credit card debt surged from ₹87,686 crore in March 2019 to ₹2.7 lakh crore by June 2024, representing a 24% compound annual growth rate
- Net credit losses for credit cards have surged to 5-6%, with some issuers reporting as high as 7.5%
It’s very clear that the availability of EMIs has driven up tech consumerism in India, but also consumerism-driven debt.
Isn’t that how Capitalism works?
I guess so. Free market, am I right? The thing is that you can have free market and competition and everything and keep pushing for India becoming the greatest tech marketplace in the world (and I seriously hope it does).
The other thing is that in any kind of market, your financial health is entirely up to you. And I’m here to also tell you that almost no one will tell you that if you can’t pay for your new phone in full upfront, you need the money more than you need the phone.
Also, young millennials and Gen Z are driving the surge in defaults. Research indicates that most young millennials are “using the entire limit and directly defaulting, turning into a Non Performing Asset (NPA) without even revolving the loan”. This pattern represents a departure from traditional credit behavior, where borrowers would typically make minimum payments before defaulting.
- Financial experts describe a dangerous pattern where consumers are caught in a cycle of “Earn, Borrow, Repay, Repeat. No savings. Swipe again”. This behavior is particularly problematic because:
- Around 70% of iPhones in India are bought on EMI
- Average credit card debt per household in urban India has increased by 23% since 2022
- 11% of small borrowers have already defaulted while many juggle multiple loans simultaneously.
For more, read this post from Dhanam.
Amazon and Flipkart and Others Want Your Money, Not Your Wellbeing
Flipkart received an NBFC license to directly offer consumer debt services (see TWITI #23 of 2025). Amazon owns Axio which it uses to offer Amazon Pay Later, so you can buy literally anything on debt to Amazon.
Buy Now Pay Later (BNPL) services is a growing FS industrial sector in India. And I don’t doubt its intent or benefits it could bring to consumers.
The thing I have a problem with is how e-commerce platforms make it so easy for you to fall in debt – over something like a f*cking phone.
Debt is not always bad, if you use debt to bring in more money into your life. Debt is always bad when you use it to buy a depreciating asset or a liability, like a car or a phone.
Don’t fall into it. Don’t be too eager. EMIs are not always easy.