Two years ago, on 2 July 2009, a momentous ruling by the Delhi High Court brought India’s gay community out of the closet. Sweeping aside laws first passed by the colonial British, judges decriminalised homosexual intercourse between consenting adults, previously deemed an ‘unnatural offence’ and punishable by a 10- year jail term. This was, without doubt, a stunning victory for equal rights campaigners. But it also marked the birth of a new economic phenomenon, which this conservative society is still struggling to adjust to: ‘the pink rupee’.

Out Now, a marketing consultancy specialising in the gay sector, estimates that India’s gay population is 45 million strong. “In most populations, around 6% of the adult population is lesbian or gay,” says its chief executive, Ian Johnson. “Applying that to India suggests that just under $200bn (6% of its GDP) can be assumed to be in the hands of gay and lesbian adults.” Moreover, the assumption that childless, career-motivated same-sex couples have plenty of cash to spend appears to hold as much weight here it does in the West. “There is sometimes a skew towards higher-earning individuals in certain research studies – we believe this is due to generally higher reported education levels among gay and lesbian people,” adds Johnson. “Research reveals higher levels of disposable income in these samples, primarily due to a lower prevalence of children.”

Gay spending power is growing fast in Delhi, Mumbai and Bangalore, and investors and entrepreneurs alike are sizing up the market. “The power of the wallet is being used to de- stigmatise queer communities and perhaps highlight them as a potentially powerful market,” says Shobhna S Kumar, founder of Queer Ink, an online bookstore specialising in the lesbian, gay, bisexual and transgender (LGBT) market. After the Delhi ruling, she, like many entrepreneurs, seized the moment.“The timing was favourable as people were openly looking for reading material on queer issues. In particular, titles that addressed the concerns of family and friends became popular.”

Since there are only a handful of businesses offering gay- friendly services, and these tend to be based in the big cities, the market remains relatively untapped, at least for the time being. “India is still a developing gay society,” says Johnson, “which means gays tend to gravitate to larger urban centres for reasons of community and support. This trend is one we have seen repeatedly in the various markets we have worked in around the world these past two decades and one that we observe is currently underway in India.”

One sector set to benefit from a more tolerant climate is tourism. “There is a huge potential for any form of business, but it will take time to capture the whole market,” says Sanjay Malhotra, founder of gay-friendly travel business Indjapink. “But then there are sectors which have higher chances of success, such as tourism and travel, hotels and bars.” A budding trend in start-ups targeted at gay consumers can already be seen, according to Johnson. “This mirrors a pattern we have observed in the early stages of market development elsewhere,” he says. “Next you should expect to see individual hotels, then hotel groups, beginning to seek competitive advantage with gay travellers. It will all happen in the next five years.”

There is a growing demand, too, for tailored packages such as gay honeymoons. “For years India has been a fascinating destination for Europeans,” says Malhotra.” As the acceptability of gays grows, the travel industry will be able to make the most of the potential and create unique services for this particular segment. Honeymoon packages could be one of them.”

Some media organisations have also embraced the gay community. The lifestyle magazine Time Out, for example, recently launched an LGBT card that entitles the holder to discounts at restaurants, spas and events in Mumbai. Meanwhile, advertisers for brands including Virgin and Levi’s have used subtle gay imagery and slogans such as “It’s time to open our minds” in their campaigns.

The film industry is capitalising on these shifting trends as well. Last year saw the release of Dunno Y, which featured the first gay male kiss in Bollywood history. The film attracted more controversy when the parents of actor Yuvraaj Parashar, who played one of the two lead characters, took legal action to disown him for bringing shame on them, claiming “not to want to see his face even in death”. It seems that homosexuality still hasn’t shaken off its stigma, even in Bollywood – and for all the tolerance shown in the big metropolitan cities, that fear of shame remains a powerful force.

Out Now’s Johnson says that operating in such a conservative market means investing in marketing and branding and responding to customers’ requirements. “So if you sell financial or legal services, understand how your gay and lesbian customers’ needs can differ as a result of not being in a traditional married relationship – then tailor your products, services and communications strategies to meet those different needs.”

Some businesses, however, have no idea how to take advantage of this emerging market. “Many owners and managers are working from prejudices and ignorance about gay issues and lives in India,” says Johnson. “Traditionally and culturally, these communities were hidden from the mainstream, hence people in the mainstream do not know how to approach or cater to a section of society that are potentially big spenders.”

But entrepreneurs who do recognise the potential of the pink rupee face the issue of whether they want to be identified solely as a gay or straight concern. This presents a distinct opportunity to online businesses, says Queer Ink’s Kumar. “The major reason for e-commerce being successful is that one does not have to walk into a venue that is openly signposted as LGBT/queer,” she points out. “Stigma is something the queer communities have to live with and this becomes a catch-22 for queer and queer- friendly businesses.”

Kumar makes the point that, realistically, it is difficult to differentiate between the purchasing powers of gays and straights. “Instead of going to a mainstream nightclub, queer people may go to a ‘queer-indentified’ night at a nightclub once a month,” she says, “which makes it difficult to separate from the main business. And it takes time to prove there is a visible change in mainstream policies and products geared toward the queer communities.”

“Although a lot of people from the Indian gay community have disposable income,” says Indjapink’s Malhotra, “it seems there are only limited ways of spending it. So the country needs more LGBT-related businesses which are well established.”

But there are signs that investors are at last recognising the pink rupee’s power. Queer Ink, for instance, is currently in talks with a venture-capital fund. “Our next venture will be publishing,” says Kumar. “We will be an exclusive queer publishing business to promote and visualise queer India.”

Johnson is upbeat too. “By definition, we predict that almost any sector in India will be able to be considered fast-growing over the next five years,” he says. “In addition, you have the removal of discriminatory laws, a global economy keen to plug into Indian growth and a 21st-century expansion of growth of the LGBT sector within the general economy.”

Experience tells him that India is in the same position as Western markets were 20 years ago. “Gays and lesbians are just finding their voice as a community,” he concludes. “And as a market force to be reckoned with.”