India's luxury market to grow three-fold by 2015

09 Apr '12

3 min read

The luxury market in India is likely to grow three-fold by 2015, according to a recent report.

The luxury market in India has witnessed a healthy growth of 20 percent and is estimated to have reached US$ 5.75 billion in 2010. Of these, luxury products have grown the fastest at 29 percent to reach a size of US$ 2.05 billion, well above expectations of 23 percent. While luxury services have grown at 22 percent to reach US$ 0.95 billion, luxury assets have grown at 13 percent to reach US$ 2.75 billion.

India's luxury market is projected to grow by three-fold to reach US$ 14.72 billion by 2015, according to AT Kearney's India Luxury Review 2011 report.

Speaking to fibre2fashion, Mr. Abhay Gupta, founder, promoter and CEO of Luxury Connect, said, “Higher disposable income and education levels have further strengthened the willingness of Indians to spend on high-end luxury products. If the current economic conditions remain same, Indian luxury retail will see a great rise.”

Analyzing the lukewarm response to the Indian Government's decision to allow 100 FDI in single-brand retail, he says, “The latest opening up of 100 percent FDI clearance in single-brand retail was expected to prompt more brands to enter the lucrative Indian luxury market. However, the primary reason for lukewarm response seems to be the 30 percent sourcing clause, wherein the brand needs to source 30 percent of their products from Indian SMEs. Majority of foreign brands eyeing Indian luxury market as a retail hub, are not even sourcing from India for their global requirements.”

Commenting on future prospects for luxury retail market in India, he says, “It certainly looks promising. There are a lot of brands eyeing Indian shores and it will boil down to further product specific specialization. Luxury Connect is in talks with 10-12 luxury brands with a long-term vision for India.”

“There is a lot of scope for improvement in strategising the brand entry and how it should sustain the incredible Indian market. There have been many instances of luxury brands closing down in India. One of the reasons for closing down has been poor location planning, resulting into low footfalls leading to poor bottom lines. Joint ventures have also gone sour in the past as the sales personnel of Indian partners have been unable to understand the luxury brand's DNA and consequently failing to pass on the brand's DNA to Indian clientele. In spite of such reasons hampering the growth, luxury retail in India has witnessed 20 percent growth. So, the full potential is yet to be unleashed,” he mentions.

Fibre2fashion News Desk - India

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