India’s positioning as a prominent global hub of luxury fashion is on a steady rise. What elements are propelling this landscape shift and opening new avenues for international luxury brands?
The country’s relationship with luxury is nothing new. Over-indulgence and desire have been entwined into the fabric of Indian history. The first diamonds in the world were discovered in the Golconda mines in India over 2500 ago.
The Mughal era bore testimony to India’s grandeur and luxury. Even as late as the 19th century, many high-end European brands like Louis Vuitton, Van Cleef & Arpels served the Indian royals. Opulence and extravagance were the way of life of the royalties. Notably, the Patiala Neckless still remains part of the largest-ever single order to Cartier to date.
However, imperialism changed it all, relegating India to an underperforming luxury market, and keeping most absolute luxury brands at bay from expanding their operations in the country.
Today, India is one of the fastest-growing markets in luxury and has the potential to become the next big thing in the industry. According to Euromonitor International, the market for Luxury Fashion consumption in India grew to $8.5 billion in 2022, a $ 2.5 billion increase from 2021.
Changing luxury landscape
Christian Louboutin was one of the first international brands to work on an India-specific capsule. In collaboration with celebrated Indian designer Sabyasachi Mukherjee, the French luxury shoe brand created a capsule collection between 2015 and 2019.
Reliance Brands Limited (RBL) has partnered with over 60 premium global brands such as Burberry, Giorgio Armani, Valentino, and Balenciaga. Aditya Birla Fashion Retail partnered with the niche French luxury department store chain Galleries Lafayette.
In March 2023, Dior ditched Paris for Mumbai. Against the majestic backdrop of Gateway of India, overlooking the Arabian Sea, Maria Grazia Chiuri presented the pre-fall 2023 collection from the Maison. Behemoths like Kering, Richemont, and LVMH too are pivoting towards India.
Earlier this year Bollywood actor Deepika Padukone was named the global brand ambassador for Louis Vuitton and Cartier, while Alia Bhatt became the ambassador for Gucci. Who can forget how chic and ethereal Priyanka Chopra Jonas looked in the deep red ensemble when she posed with Anne Hathway and Zendaya for a grand soiree for the unveiling of Bulgari’s Mediterranea High-Jewelry 2023 Collection in Venice as one of the global ambassadors for the brand!
Driving factors
According to Bain and Company report, India’s luxury market, is expected to grow exponentially to 3.5x the current size by 2030. It credits an ‘increasing interest and evolving attitudes and behaviours among young customers towards luxury goods’ as a driver to propel growth.
Here are 5 contributing factors:
1. Post-pandemic revenge spending- Luxury has been one of the sectors which has bounced by five to ten years in terms of consumption because of the pandemic. Credit it to revenge shopping or an increase in purchasing power, there has been a surge in spending on luxury, which encompasses lavish jewellery and watches, extravagant destination weddings and exotic international holidays, acquisition of luxury real estate to automobiles as well as indulging in gourmet dining experiences.
2. Rising entrepreneur successes and unicorn companies- A fresh wave of young entrepreneurs is taking the world of business by storm, propelling their enterprises to soaring heights. The ranks of India's ultra-high-net-worth individuals (UHNIs), those commanding fortunes of $30 million or more, are swelling. According to recent reports, the number of millionaires in India is projected to grow by 105% by 2026. These UHNIs are not just affluent; they are the driving force behind the explosive expansion of the Indian luxury market.
There is a steady increase in disposable income. India’s economy is in the midst of a resounding transformation, marked by persistent growth over the past decade. This surge has not only bolstered disposable incomes but also given rise to a burgeoning middle class.
The shifting dynamics of consumer behaviour and purchasing pattern has paved the way for premium brands to flourish. As more and more individuals aspire to elevate their standard of living, they enthusiastically embrace premium products that promise unparalleled quality, exclusivity, and a coveted status symbol.
3. Social Media and influencer culture- With social media at a boom, young customers are more exposed to global trends and lifestyles, which is increasing the appetite for luxury and premium goods. Digital platforms have also ushered in a new era of convenience and accessibility for luxury consumers, who can have privileged access to rare, limited-edition treasures and coveted collaboration, weaving an aura of unparalleled exclusivity.
4. Indian weddings- Indian weddings account for a lion's share of luxury spending. In the last two months of 2022 alone, it is estimated that 46 billion dollars were spent on weddings. At ultra-high-net-worth weddings, expectations remain very high. It's not just the hosting family; every guest gracing the occasion ranks among the world's most eminent and discerning individuals.
Traditions play an important role, but Indian brides are now getting experimental. Isha Ambani Piramal’s trousseau included the first-ever Indian lehenga made by Maison Valentino.
UHNW brides are adventurous and experimental with evening dresses and gowns, which is opening new horizons for international luxury brands to make their way into Indian weddings. To cater to modern brides, Bulgari launched the exquisite ‘Mangalsutra’, an auspicious thread tied around a Hindu bride’s neck during the wedding.
5. New tax laws for foreign spending- Under the Liberalised Remittance Scheme, the Government of India is all set to implement a 20 per cent tax on expenditures made outside the country exceeding ₹7 lakh (~8400 USD). This tax is poised to further stimulate the sale of luxury goods within India.
In a bid to tap into new demographics and showcase their collections, luxury brands have collaborated with Indian retailers in the recent past. This harmonious fusion has brought a diverse spectrum of luxury brands within arm's reach of Indian enthusiasts. The upcoming tax reform will further encourage Indian shoppers, while abroad, to allocate their ₹7 lakh limit to expenditures, other than purchasing goods that are available in the country, leading to an expansion of the luxury industry.
The Challenge
As a vast landscape teeming with uncharted potential for retailers, India is perhaps the final frontier of luxury consumption today. In a land of rising incomes and unexplored commercial horizons, the allure of the luxury market knows no bounds. Yet, amidst this promise there exist profound reasons- price-sensitive market, diversity, lack of infrastructure for niche products, heavy import tax on goods manufactured outside India, complex regulatory frameworks impact pricing and profitability- why the realm of luxury remains an enigma waiting to be unlocked in India.
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