As growth in China's luxury market slows, global luxury brands are looking to India as the next growth market. However, analysts say structural constraints remain significant, including high tariff, inadequate distribution infrastructure, and a limited domestic base.
On the 18th (local time), the Financial Times (FT) of the United Kingdom reported that at an international polo event recently held in New Delhi, global luxury industry officials said India has the potential to grow into a major luxury consumption market. Adrian Simonetti, co-founder and chief executive officer (CEO) of La Martina, an Argentine premium leisure and polo brand, said, "Luxury in India goes beyond simple brand consumption and carries the meaning of being incorporated into a global lifestyle."
Global brands' focus on India is tied to changes in the Chinese market. Before COVID-19, China accounted for about a quarter of global luxury demand, but growth has slowed due to an economic downturn and changes in consumption patterns. As a result, luxury corporations are seeking new growth drivers, and India is emerging as an alternative market on the back of rapid economic growth and a rising affluent class.
Still, observers say entering the Indian market remains difficult. Industry experts cited inadequate logistics conditions, a lack of high-end malls, and complex distribution structures as major constraints. In particular, the fact that many high-income consumers travel abroad—to Dubai, Singapore, and Europe—to buy luxury goods is also limiting expansion of the domestic market.
The tariff burden is also a hurdle. India has traditionally maintained high import tariff policies, and some luxury items are subject to tariffs exceeding 20% and a goods and services tax of up to 40%. As a result, the same products are structured to be significantly more expensive than overseas.
The market size is still limited. According to market research firm Euromonitor International, India's luxury market is about $12 billion (about 1,700 trillion won), making it one of the fastest-growing markets in the world, but it remains in its early stages compared with China. Louis Vuitton Moet Hennessy (LVMH), the world's largest luxury group, operates three stores in India, while it has dozens in China.
Even so, global corporations continue to enter the market. Global beauty corporations such as L'Oréal and Estée Lauder have already moved to expand in India, and Galeries Lafayette, a French department store, opened its first store in Mumbai last year. Burberry, Armani, and Versace are also expanding their presence in partnership with the Reliance Group led by Indian tycoon Mukesh Ambani.
Experts see India's market growth as more likely to play a complementary role rather than replacing China. Victor Graf de Jonge von Monteton, a partner at consulting firm Kearney, said, "The absolute size of the Chinese market remains overwhelming," adding, "Even 4%–5% growth in China's luxury market can generate more additional sales than India's entire market."
Analysts say that for India's luxury market to take off, it is essential to expand distribution infrastructure, lower tariff, and broaden the base of domestic consumption. An industry official said, "India has great potential, but it is still closer to a 'future market,'" adding, "Now is the time for a strategic decision on the timing of entry."