Indian luxury market may boom to $30 bln by 2015
No stranger to Bharat, luxury is all set for an unprecedented flourish here as the Indian consumer has overcome the guilt pangs associated for ages with indulgence. The size of the luxury market in India is estimated at around $3.5 billion, and what’s best, given the right impetus, it could easily leapfrog to $30-billion by 2015.
Indians are lapping up luxury assets, services and goods with voracious appetite, according to a comprehensive survey done by AT Kearney for The Economic Times. Indians splurge $2.9 billion on luxury assets (essentially private jets and luxury homes, cars or yachts and art), spend another $953 million on luxury services and top it by buying luxury goods worth $377 million, said the survey which was unveiled here on Thursday at ET’s first-ever luxury conference, ‘Dialogue on Luxury’.
Be it private jets, art, yachts, luxury homes, top-of-the-line cars, spas, fine dining, travel, holidays, jewellery, state-of-the-art electronics, wines & spirits, apparels or personal care products like perfume, the confident Indian consumer is going for it all. “I have arrived and I want it,” is what resurgent India’s creamy layer feels.
The typical luxury brand consumer is in the 25-34 age bracket, usually an industrialist. The survey indicates that there is no guilt feeling associated with spending on luxury, according to Neelesh Hundekari of AT Kearney. Briefing participants at the conference he said there was strong growth in consumption of key luxury items and the potential was stronger. The Indian consumer wants to get the best before others, demands value for money through tough negotiations, and looks forward to recognition and respect. The conference was kicked off by commerce & industry minister Kamal Nath and Lady Lynn Forester de Rothschild, founder & CEO of EL Rothschild LLC, the audience included designers, hoteliers, luxury brand marketers, decision-makers, aviation specialists, corporate honchos and Delhi’s connoisseurs.
Apart from industrialists, the big spenders identified in the survey include professionals, self-employed and top guns working for leading corporates. Consumers of luxury are located across the nation, be it Kanyakumari or Kancheepuram in the south, Jalandhar and Lucknow in the north, Surat and Pune in the west or Asansol in the east. Mumbai, Delhi and Bangalore are the top three cities in terms of rupee millionaires, said Hundekari as the audience soaked in the findings and thirsted for more.
A very interesting fact highlighted by the survey was the potential of India to be a source of luxury goods for consumers across the world. Manufacturing of luxury items in India can grow to $500 million and India’s strengths include traditional craftsmanship and low labor cost. There are a number of challenges, too, for the luxury business and this include paucity of trained manpower, regulatory issues and high taxation, the survey pointed out. The import duty on premium cars, for example, stood at 205% while wines & spirits invite 185% customs levy. The survey also pointed out that that import duty was high in the case of personal care items, fragrances, leather accessories and watches. Lack of quality retail space was another reason hampering growth of the industry. While development of quality space will happen once real estate picks up, the industry needs to spend on training to generate quality manpower. Poaching may not help and such tendencies will only hurt the entire industry.
On the regulatory side, the survey also highlighted that restrictions on foreign direct investment in retail was hindering growth of the industry. Since the luxury market is not organized, the organizations concerned are not working together on industry issues. As a result growth remains below potential and regulatory issues are not being pursued vigorously. As compared to markets like the US, Japan, Germany and even China, the size of the Indian luxury market is small but the growth potential is tremendous. The number of high networth individuals is increasing and the tendency to opt for global brands increases as more and more Indians travel abroad, the survey said. (economictimes.indiatimes.com)
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