Unveiling Luxury Market of India
India is making headlines, whether in the field of space science or its economy. The International Monetary Fund (IMF) estimates that by 2027, India will become the world's third-largest economy, with a GDP exceeding $5 trillion.
By the same token, the luxury market in India is experiencing robust growth, attributed to several key factors. These include the escalating numbers of high-net-worth and ultra-high-net-worth individuals (HNIs and UHNIs), a growing appetite for high-end products and experiences within the middle class, and a rising demand emerging from Tier-2 and Tier-3 cities.
As per a report by a global investment bank and financial services firm, the number of millionaires in India is expected to experience triple-digit growth between 2022 and 2026, and the proportion of millennials among the country's millionaires is also rising significantly. Furthermore, the impact of Generation Z (Gen Zs), those aged below 24, is growing stronger, as they become increasingly influential in driving sales and shaping the trends of luxury brands. The rise of millennials and Gen Zs in the luxury segment is catalysing a shift in the way products are purchased and experienced: Their heightened preference for digital experiences, loyalty, exceptional customer service, and reduced emphasis on owning the product is reshaping the landscape.
Indian consumers are exhibiting confidence about their financial state. According to Deloitte’s ConsumerSignals Tracker, 70 per cent of high-income individuals express the ability to spend on things that bring them joy, which is also influenced by the recovery of savings per cent from the Covid-19 pandemic, while 68 per cent believe they will possess the financial resources to live their best life in the next five years.
These trends coupled with various government initiatives make us confident of the expected strong growth of the luxury market in India. The key trends in some of the major luxury spending categories are:
From Crisis To Crown
The luxury car market has successfully bounced back from the Covid-19 impact, regained its pre-pandemic volumes in 2022 and is expected to grow at a double-digit CAGR between 2022 and 2027. In addition to the increasing wealth and income levels in the country, this growth is driven by increasing demand from Tier-2 and Tier-3 cities, owing to improved road infrastructure, and increasing footprint of luxury automakers in these cities. The increasing affinity towards electric vehicles (EVs) also bolsters this growth: consumers are increasingly concerned about climate change and expect better driving and digital experiences. According to Deloitte’s Global Automotive Consumer Survey 2023, approximately 40 per cent of customers would prefer to buy an EV over an ICE vehicle, and EV intenders are ready to pay more for their next vehicle as compared to ICE intenders.
Aspirations Ablaze
The Indian luxury jewelry market is on a promising upward trajectory, influenced by both its deep cultural significance in the country and the rising levels of income and wealth. A noteworthy driver of this market is the bridal jewellery category, which claims a 50-55 per cent market share in the broader jewellery segment, as per the World Gold Council. This expansion within the bridal jewellery segment is attributed to the fact that nearly half of the country's female population is below 25 years of age, as per the World Gold Council, leading to a projected surge in demand for this category.
Across luxury spending, the luxury accessories segment also secures a top position. According to Deloitte’s ConsumerSignals Tracker, Indian consumers are growing optimistic about their financial situation: 75 per cent of them reported an improvement in their income levels in the past year. These increased income levels coupled with penetration of ecommerce into Tier-2 and Tier-3 cities are driving the demand of the luxury accessories market.
In tandem with shifting consumer trends, the Government of India has undertaken several strategic measures. These include the reduction of import duties on luxury items, the provision of incentives through ‘Make in India’ to encourage domestic luxury production, investments in infrastructure development, and an amplified focus on ecommerce and digital initiatives. These proactive steps are not only spurring demand but also attracting foreign players to invest in the country’s burgeoning luxury market.
Views expressed are personal
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