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It's a blistering 115° on a summer Sunday in New Delhi, and it feels as if your head is stuck in a tandoor. But Saurabh Kedia, 22, would never know it. The New Delhi native dips his flat naan bread into a dish of spinach curry in the air-conditioned comfort of a friend's private club. On the table lies Kedia's prized possession, an Ericsson feature-loaded mobile phone with PDA-like functions that cost him nearly $400, almost as much as an average Indian earns in a year. That night he plans to watch X2: X-Men United at a posh, newly built multiplex theater south of New Delhi and then sip cappuccinos with friends at one of the city's hip new coffee shops, a twice-weekly indulgence for Kedia. With his job as a computer-call-center manager, he is earning enough to consider buying a car and even his own apartment. "We are able to make more and much easier money," says Kedia, beaming. "Every year in India, things are looking up."

Kedia is a new breed of consumer in India — young, increasingly wealthy and willing to spend on everything from mobile phones to sneakers to French fries. In the not-too-distant past, such goodies were off limits to all but a fortunate elite in India, but a rapidly changing economy is making the higher life available to more and more of the country's billion-strong population. College graduates are landing well-paying jobs in a host of emerging industries that barely existed in India three years ago: retail chains, fast-food restaurants, mobile-phone companies and especially call centers, data-processing firms and other businesses that do "back office" work for U.S. companies. KSA Technopak, a management-consulting firm in New Delhi, estimates that these young adults command $10.5 billion in cash to burn. The spending of these college grads is rising about 12% a year — more than twice the pace of the economy's growth.

The youngsters are part of a middle-class boom in India. The National Council of Applied Economic Research estimates that the number of people living in households that earn at least $1,800 annually — considered the minimum for middle-income families — has increased 17% in just the past three years, to more than 700 million. At this income level, Indian families can purchase motorbikes, televisions and refrigerators. The organization expects the number to rise an additional 24% by 2007. "Income is growing like anything," says R.K. Shukla, a statistician at the National Council. "The future is very rosy in India."

In this way India is mimicking — and still trailing — Asia's other Goliath: China. Beijing's cadres embraced market reform much earlier than their Indian counterparts did — back in the late 1970s — and have been much more devoted to liberalization. As a result, China's per-capita income, now about $900, has been growing at least twice as fast as India's for the past 20 years. With incomes rising in China, foreign investors found a more sizable market for their wares there than in India. For example, China has 230 million mobile-phone users, India a measly 18 million.

Yet such companies as Citibank, McDonald's and Motorola are hustling to tap India's burgeoning number of young big spenders. Brands like Reebok and Nokia are making deeper inroads than ever before. Modern malls and fast-food restaurants are proliferating among the crumbling British colonial buildings and ancient monuments that dot India's cities. "These guys are a huge consumer audience," says Raman Roy, managing director of Wipro Spectramind, one of India's largest call-center operators. "There is a fundamental economic change happening."

The cutting edge of this consumer boom is on full display in Gurgaon, a satellite city south of New Delhi that is rapidly developing into mall-rat heaven. Since December, three mammoth, glitzy malls have opened their doors there, crammed with a collection of stores airlifted straight from America's suburbs — Nike, Benetton, Pizza Hut, Subway sandwiches, even a showroom for Bose audio systems. Two multiplex theaters show such Hollywood hits as The Matrix Reloaded. Five more malls nearby are in the works.

Gurgaon has become the official stomping ground of Swati Jain and Yamini Kandari, both 22, roommates and co-workers at a nearby call center, where they field phone traffic for a U.S. computer maker. Every weekend they stroll the malls shopping for Levi's jeans, watch movies and make the obligatory stop at McDonald's. Though they both have big dreams (Kandari wants a Ferrari; Jain prefers a Mercedes), they spend half their annual salaries — about $2,000--on shopping, eating out and other living expenses. "I'm living life for the day," says Kandari.

Only three or four years ago, high-paying jobs were largely limited to India's famed technology sector, centered in the southern city of Bangalore — only engineering geeks needed apply. Now more diverse foreign businesses are taking advantage of India's low-cost, highly educated work force. Add the fast-growing Indian companies, especially in the service sector, and the result is that good jobs become available to anyone with a college degree. Bharti Tele-Ventures, India's largest mobile-phone service provider, has hired 1,600 customer-service staff over the past two years. Wipro Spectramind had only 200 employees at the end of 2000; now it employs 5,100.

This growth has been a godsend for Indians like Kedia. Two years ago, Kedia was just a run-of-the-mill college grad with little idea of what to do next. He tagged along with a friend visiting a call center. The recruiter there asked if he would interview for a job, and he scribbled out a resume on the spot. His first task was troubleshooting for U.S. computer-maker customers over the phone, working all night in New Delhi to help Americans with their PCs during the day. Since then, Kedia moved to a similar company and has been promoted twice to manager. His salary has quadrupled to $6,200 annually — a treasure in a country where the per-capita income is only $470--and he believes it will double again over the next two years.

Jyoti Sthankey, 21, a part-time student from western India, left a job at a state-run airline this year to become a sales clerk at Wills, a new clothing shop in central New Delhi, convinced that she had a better chance to move up in the rapidly growing chain. She's aiming to quadruple her $2,000 salary by advancing to management in two years. In June, Sthankey and her brother, who manages a Pizza Hut restaurant, moved into their first, small house, its $10,400 cost paid entirely with savings. A month before, she spent a month's salary on a Nokia mobile phone. "In previous days, we didn't have such an opportunity," Sthankey says.

Kedia and Sthankey can thank an increasingly liberalized Indian economy for their more affluent lifestyle. For the first four decades after India gained independence from Britain in 1947, its socialist-leaning leadership, fearful of domination by foreigners, walled off its economy from global markets, using high tariffs and stiff entry barriers. An ideology favoring small cottage industries, fostered by no less a figure than Mohandas Gandhi, led the government to tie up private enterprise in a web of regulations, nicknamed the License Raj, that shifted economic power to inept bureaucrats. Foreign companies pushing their way in often found that only a few people had the cash to buy their products. But by 1991, with its economy stalling, India began opening up its markets. Though that process has often crawled along, Indian incomes have been climbing more rapidly.

The rising number of young consumers in India is providing one of the few hot markets in a sluggish world economy. U.S. telecom-equipment maker Motorola says sales of its mobile phones in India increased 200% in the first six months over the same period last year. Tearing a strategy page from its very successful China playbook, Motorola targets youngsters with cheap phones. In June Motorola joined up with Bharti to offer phones at $64--an offer it claims is the cheapest in India. "The attitude of the young generation is to enjoy life and spend money," says Pramod Saxena, president for Motorola in India. "We're looking at India as a major growth market."

Economic liberalization has led to cultural liberation too, as young Indians become more connected to global entertainment. From only two staid state-run television channels in the early 1990s, cable-TV subscribers can now get 80 or more, replete with MTV and episodes of Friends. These mutually reinforcing trends prompt Indians to crave the big-name foreign brands that India's protectionist politicians kept out of reach for so long.

Attitudes toward money are also changing. The mantra for the average Indian family, as in most of Asia, has always been save, save, save, but young Indians today, inspired by job opportunities, have switched to spend, spend, spend. According to KSA Technopak, Indians spent 55% more money eating out in 2002 than the year before. They're also more willing to take on debt. In the past two years, the number of new credit cards issued has jumped 25% annually, and new mortgages 35%.

Typical of the new trend is Samit Kapoor, 28, an assistant manager at Exl Service, a call center near New Delhi. Last year Kapoor took a mortgage to buy a two-bedroom apartment, and this year he purchased a car, a Hyundai Santro, for about $7,000. Four times a month, Kapoor visits New Delhi's top restaurants, among them Italian bistro Flavors or Indian-food specialist Bukhara, dropping as much as $40 a meal. In the process, he ran up about $4,200 in credit-card debt, spread over three cards. Since getting married six months ago, he has been persuaded by his wife to scale back and pay the debt down, but he was never too worried about it. "I see more opportunities to make money in the future," he says. Though not as extravagant as Kapoor, Pawanjit Singh, 25, a manager of a busy McDonald's restaurant in one of New Delhi's main markets, splurged on secondhand golf clubs, which set him back more than $400. He heads out to a golf course (golf is a prestigious hobby in Asia) or a driving range every weekend. "I don't think people my age right now want to save," he says.

Thanks to big spenders like Kapoor, Citibank is finding that its target customer is getting younger. Five years ago, the average age of a Citibank mortgage holder in India was 41; now it's 28. As a result, the U.S. bank has introduced all kinds of programs to attract young Indians. Citibank hooked up with MTV to issue an MTV credit card designed to look like a cassette tape. ATMs are placed in locations where twentysomethings work, such as outside call centers. The bank is even targeting the under-18 crowd with a special debit card that allows kids to withdraw money from ATMs — with a spending limit imposed by their parents — and get discounts at McDonald's and Pizza Hut. "The young generation is changing the consumer-financing landscape," says Sarvesh Sarup, Citibank's chief of consumer banking in Bombay. "Targeting of that segment is very, very critical."

Global marketers still have to cater to Indian tastes, which can take some doing. Just ask Vikram Bakshi, managing director of McDonald's India. When McDonald's opened its first outlet in 1996, it had to toss out much of its standard menu: Hindus consider a cow sacred and won't eat beef. Bakshi tried introducing India-friendly alternatives. In place of the classic Big Mac, Bakshi offered a burger with mutton patties, christening it the Maharaja Mac after India's princely historic rulers. The sandwich flopped and was pulled from the menu.

Now McDonald's' menu in India is so customized to Indian tastes that an American would scarcely recognize it. The best seller is the McAloo Tikki burger, a vegetarian fried-potato patty with cheese. The newest entry is the McCurry Pan, a flat pastry filled with hot broccoli or chicken curry. The result: while the floundering fast-food giant scales back and shuts restaurants elsewhere in the world, in India it can't dish out the veggie burgers fast enough. McDonald's has 48 stores in India, 60% of them built in the past 18 months. The outlets see on average 3,000 customers a day, placing the units in the company's top 10%. Bakshi expects sales to grow 40% annually in coming years. "Our products in India should be relevant to the Indian consumer," he says.

Reebok markets sneakers with a similar strategy: taking international campaigns and tailoring them for the young Indian. For example, an ad campaign in the U.S. for Reebok Classics pictured typical figures of Americana, like a little boy with a baseball bat, clad in throwback simple sneakers. In India, Reebok replaced the lad with a grizzled, bearded snake charmer in a turban — with a flute and a woven, cobra-filled basket — and pristine white sneakers. Sales of Reebok footwear are growing at 30% a year. Rajeev Bakshi, chairman of Pepsico India, pushed the same idea a step further. "We took the variable of nationalism," he says. Earlier this year, for the Cricket World Cup, a sporting event in India of Super Bowl importance, Pepsi launched a fluorescent-blue cola matching the color of the wildly popular national cricket team. A television ad for the soda showed a blue-clad movie actor bluntly saying, "Drink Pepsi Blue. Cheer for the men in blue."

Young consumers are also reshaping how large sections of the economy work. Take, for example, the cinema industry. Movie houses have been almost exclusively mom-and-pop outfits and, as a result, old, dingy and broken down. But the young, high-spending crowd is enticing major corporate players to invest. Bombay-based Inox Leisure opened its first two multiplexes over the past year and is investing $50 million to build 11 more, each with as many as six screens, by mid-2005. Shishir Baijal, Inox's CEO, estimates that 100 multiplexes are in the works nationally. Though he charges as much as three times more for a ticket than the old cinemas did, Baijal sees the young set "coming back all the time. They are getting more exposure. They know what they want."

Executives and economists see little chance that the boom in spending will slow down anytime soon. The National Association of Software & Service Companies, an industry group in New Delhi, expects that 1 million people will be working in call centers and other "back office" operations in India by 2008, up from 160,000 in March. "There will be significant opportunities for people to look for higher incomes," says Hemendra Mathur, a manager at KSA Technopak. For all those millions of potential Saurabh Kedias, the news could hardly be better.

• Michael Schuman/New Delhi