India's luxury market may reach $15 billion by 2015, says trade group

The luxury market in India is seen growing 25 percent annually in 2013-2015 and may soar to $14.7 billion from the current level of $8 billion despite the global economic slowdown, says Indian trade group ASSOCHAM.

ASSOCHAM Secretary General D S Rawat said, “The luxury market is poised to expand three fold in the next three years and the number of millionaires expected to multiply three times in another five years.

"An increase in spending is anticipated across the country and beyond the walls of the metros [large cities], with increasing brand awareness amongst the youth and purchasing power of the upper class in Tier II & III cities in India where luxury cars, bikes and exotic holidays and destination weddings are no strangers.”

The group says that global consumer spending will also rise, and is expected to reach $40 trillion by 2020, with an unprecedented growth of $12 trillion in a decade.

Consumer spending is expected to grow 400 percent to $3.6 trillion in India in the same period, boosted by rising income.

The number of Ultra High Net worth Households Indian is expected to triple in the next five years with a five-fold increase in their net worth.

Private equity investments in the luxury sector over the last three years have been less than $1 billion, compared to total private equity investments in the Indian economy of $35 billion during the period.

However, with the luxury market expected to grow at over 25 percent annually, private equity investments in the luxury segment are expected to increase.

“India and China have shown their resilience to the global turmoil by exhibiting sustained growth and thus laying a solid foundation for future global economic recovery," said Rawat.

"A reflection of this can be seen in the potent demand being witnessed by global luxury brands from these emerging economies. As elite members of the BRIC [Brazil, Russia, India, China] club which currently accounts for 11 percent of the total world luxury sales with a combined retail value of over $33 billion in 2011-12, India and China are poised to undertake dominant positions in the global luxury market.

"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.

Jewelry is likely to be the largest contributor to the rise in sales of luxury products, accounting for almost a third of the market.