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How India’s Share In Global Luxury Market Is Increasing, Amidst Challenges
GST has brought in much needed transparency in luxury sector, streamlined domestic supply chain and a push to the retail market further
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Luxury market is still not a priority for government. Undergoing a phase of transition, the Indian luxury market has its own share of challenge, one of them being government support. Though the industry understands the core priority of the government to address the plethora of challenges in the country, the luxury market has taken the task onto their own hands and is on a dynamic growth map.
“We are going through a huge change, which is bound to witness some turmoil. Having said that, it is all for positive growth. There is a huge amount of unaccountability and lack of transparency that is now being addressed by the government. I don’t think GST has bothered the retail market much, but there are other challenges like duties on imported luxury goods that should be addressed, if we want to bring price parity,” said Kalyani Chawla, Luxury Brand Consultant and Former VP, Christian Dior Couture, on the sidelines of 5th India luxury Summit 2017.
Speaking on the price parity, Chawla mentioned how the issue is not restricted to duties, but also mindset and knowledge. Indian consumers prefer to shop in Dubai and south East Asian countries, even though the prices offered by these countries for high end brands stand at same value.
Naushad Gagrat, Business Manager, Reliance Brands pressed on an important challenge of creating a ‘mass affluence’ in the luxury market which is restricted to the rich affluent today in India.
“Through luxury we are only catering to the top of the pyramid and creating differentials in those itself. One of the reasons countries like China have high share of global luxury market is because mass affluence. We need to push for the same,” said Gagrat. Similar sentiments were echoed by Amit Pande, Brand Head, The Collective.
Speaking of restriction of Luxury market to rich, the panel of experts, moderated by Smita Tripathi, Senior Associate Editor, BW Businessworld elaborated how the market is trickling down to tier 2 and 3, not on a big scale, but significant.
“There is a shift in growing paradigm and there lies a huge potential to tap these markets. There is an emerging market in cities like Kolkata, Hyderabad, Bhopal, Ludhiana and others. Pop-ups and trunk shows are on a rise in these markets where the conventional stores have not reached yet,” said Karan Ahluwalia, Chairman, Assocham National Council on Luxury and Lifestyle.
Ahluwalia also mentioned how GST has brought in much needed transparency in the sector, streamlined domestic supply chain and a push to the retail market further.
Sunaina Kwatra, Country Manager-India, Louis Vuitton said how India is an extremely important market for the global luxury brand, seeing lot of changing aspects like younger demographics, infrastructure, increasing demand potential and better government regulations.
“We plan to open a service centre in the capital and also got the license to open single-brand retail stores in the country last October. Things are changing and improving to a great extent,” said Kwatra.
India allows foreign firms to sell directly to consumers through the so-called ‘single-brand retail’ route. The foreign direct investment into the country grew 9 per cent in 2016-17.
Earlier, companies had to source 30 per cent of the products locally. But, India moved to partially relax these conditions in 2016, exempting foreign retailers for three years from the 30 per cent local sourcing rule in a bid to attract more investment.