The phenomenal growth of the Indian economy is well documented, however, wellness and spa companies wanting to do business there need to be surgical in their analysis of the opportunities if they are to create successful businesses.

Although the wellness and spa sector is forecast to grow from inr700bn in 2012 to over inr1 trillion in 2015, this number hides a plethora of variables, many of which have been thoroughly laid out by a new PricewaterhouseCoopers report on the Indian wellness economy Imperatives for growth: the wellness industry – an invaluable document for those considering investing.

The report shows strategic deals with partners are driving much of the growth: up to 65 per cent of all deals since 2009 have been of this nature. International operators targeting India, initially aiming for the 15 bigger cities, are now going into second and third tier locations to maintain growth. In hair and beauty they include Dessange, Saks and Toni & Guy, in fitness, Fitness First and Anytime Fitness and in spa, Six Senses.

PwC says the market has been characterised by small businesses, but the arrival of corporate players will drive investment as they look for funds to fuel expansion.

The greatest consumer demand is in three areas: hygiene, curative and enhancement. As a result, sales of products represent up to 60 per cent of the market, with services at only 40 per cent. As well as being a greater proportion of volume, products also have higher value – PwC says EBITDA for beauty and wellness products ranges from 20-30 per cent, while services operate at 8-20 per cent.

This indicates that spa operators who enter this market off the back of powerful retail brands will have both a strategic advantage and higher revenues.

There are other clues about demand: wellness-related F&B sales, skin and haircare and alternative therapies represent more than half the value of the market, meaning operators need a business model which plays to this. Fitness is growing fast, with 50 per cent of openings this year in that sector of wellness, so spas which make exercise a core offering could tap into this demand.

Standards and training appear to be the biggest hurdles to overcome in terms of industry development, but the greatest challenge overall will be creating a margin in the face of low consumer spend, discounting and global inflation. But those that navigate their way through these challenges could build businesses with exciting potential.

Liz Terry, editor twitter: @elizterry