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Luxury market in India pegged to grow at 25% till 2015

13 Feb '13
5 min read

While China is on track to become the world’s second largest luxury market within the next five years, India too is not far behind. With positive regulations and policies for the retail industry being put in place by the government along with a burgeoning middle class which aspires to own and experience luxury goods and services, India is a market that can no longer be ignored by international brands.

While various estimates exists on the size and growth potential of the Indian luxury market; most estimates align on anticipated growth rates of ~20% given the tremendous potential waiting to be harnessed such products: Apparel and Accessories, Pens, Home Décor, Watches, Wines & Spirits & Jewelry, services: Spas, Concierge service, Travel & Tourism, Fine Dining & Hotels and assets: Yachts, Fine Art, Automobiles & Real Estate.

The best returns would come from investing in luxury assets for the long term and luxury products in the short term. Cars have shown the highest growth rate in luxury assets i.e. ~40% p.a. from 2006 driven by a wider choice of brands, availability of cars in the small and mid segment as well as rapid increase in millionaires in Tier I & II cities. It is estimated that luxury assets are going to grow to US $7.9 Bn in 2015 versus US $4.31 Bn currently.

Luxury products are projected to grow to US $5.38 Bn in 2015 versus a current US $2.85 Bn. Jewelry is believed to be the largest contributor (31%) for this sub-sector driven the investment mentality of Indians in jewelry which leads to low consumer price elasticity.

“Recent trends indicate a shift in the perception of luxury as an overall experience versus a mere material possession. This is evident from data on the Indian luxury services market which has shown resilience in the face of a global slowdown. The sector is expected to grow to US $ 1.45 Bn in 2015 from US $ 1.05 Bn currently. Hotels are the largest growth contributor to this sector followed by travel, tourism & bespoke concierge services”, added Mr. Rawat.

Indian luxury market is a potential gold mine for international luxury brands. However, with every opportunity comes the accompanying challenges and India is no different. With thorough market research, prudent marketing strategies and the right local partner, global luxury players can unearth the sea of opportunities that India represents.

Assocham

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