What’s Restraining India’s Luxury Market Growth?

With a GDP growth of 8.2%, India has overtaken China as the world's fastest growing major economy. India's wealthy population is also rapidly expanding. By 2028, India's UHNW (€27.9Mn+ net worth) population is expected to grow by 50%, compared to the global average of 28.1%. A growing wealthy population will likely drive-up the demand for luxury goods but does India have what it takes to build a robust luxury sector and retain the consumption of its big spenders, domestically?

Dozens of luxury and bridge-to-luxury brands have entered India in the last 3 years. While eager to reach India’s wealthy population, some of these brands are struggling to grow due to lack of suitable infrastructure, and limitations by foreign trade policies that were perhaps not designed with the luxury sector in consideration.

India currently has only half a dozen premium or luxury malls, concentrated in just three cities, whereas India’s wealthy population is spread variably across its length and breadth, making it difficult for luxury brands to reach them all. “Less than 40% of India’s luxury spending comes from its top 10 cities, whereas in China 60% of luxury spending comes from just Shanghai and Beijing”, reveals Jean-Christophe Babin, CEO, Bvlgari, that currently has only two boutiques in India and is eager to expand but cannot "because there aren’t enough suitable malls where we can open," he says, adding that if India is to compete with major luxury markets, it needs to have at least 10 to 15 luxury malls.

A sentiment shared by Georges Kern, CEO of Breitling, who visited India for the first time earlier this year, after joining Breitling. "India needs to invest dramatically in infrastructure, particularly more malls, but it is going to take years for that to happen," he tells Luxury Tribune.

For Bvlgari, India is a crucial growth market because it is the world’s second-largest consumer of gold and thus very important for the growth of Bvlgari’s jewellery sales. The LVMH brand has taken several steps to woo India’s jewellery buyers, such as enrolling an Indian celebrity, Priyanka Chopra Jonas, as a global ambassador and launching India-specific products. However, expanding in India remains challenging, and the issues are not limited to inadequate infrastructure.