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Bengaluru: India’s luxury consumption market has had a boom since the Covid-19 pandemic, and has been unaffected by consumption slowdown in other parts of the economy. Driven by a spike in disposable incomes among high net worth individuals, post-Covid revenge spending and shift in customer preferences, India’s luxury market is the fastest growing in Asia.
If one includes premium real estate, India’s luxury market is currently estimated at around $18-20 billion and grew 17 per cent in FY25.
However, analysts now say that the post-pandemic uptick is now plateauing out and there could be a slight tempering of compound annual growth rate (CAGR), compared to what was forecast earlier.
“Projected growth for FY 2025-26 is expected to slow down to 12-14 per cent from the earlier 16-18 per cent,” said Ashish Kakwani, Partner, Consumer Products and Retail Sector, EY- Parthenon. “Demand has softened post-December 2024, observed across most luxury categories,” he added.
India’s luxury market is currently dominated by the jewellery and luxury watches segment, expected to generate revenue of around $12 billion. This category dwarfs other sectors combined, which may account for a cumulative $7 billion.
The broader luxury sector in India is now projected to reach $85-90 billion by 2030.
And it is not just the bigger metro cities, as a lot of luxury demand is coming from ‘rurban’ areas and tier 3 and 4 cities.
“Rurban consumers are willing to spend on high-end products like Harley Davidson, driving growth for premium motorcycle companies,” stated Harish Bijoor, brand-strategy expert.
However, sales are still concentrated in metro cities due to accessibility to flagship stores. Rich consumers from smaller cities often travel to Tier 1 cities like Delhi and Mumbai to make their purchases.
Role of E-Commerce
Direct online sales accounted for 29 per cent of total luxury revenue in 2024, at around Rs 38,300 crore or $4.6 billion. Luxury brands are now directing 40 per cent of their investment budgets toward digital capabilities and infrastructure.
“74 per cent of luxury purchases now involve digital touchpoints before conversion, compared to just 29 per cent pre-pandemic,” said Tanvi Kanchan, Head- Strategy, Anand Rathi.
However, there are limits to the online channel. “For luxury purchases, e-commerce is good for discovery, but does not drive much sales. Since luxury purchases are experiential, most happen offline,” said EY’s Kakwani.
Also, experience-based luxury, which can only use offline channels, is currently a dominant force in India’s market, accounting for 35 per cent of total luxury spending- a substantial increase from 22 per cent in 2019.
“Luxury travel spending has surged 45 per cent compared to pre-pandemic levels, while wellness-focused luxury experiences have demonstrated an even more impressive 58 per cent growth rate year-over-year,” Kanchan observed.
“Bookings for business and premium economy flights have increased significantly, and even travelers from tier-II and tier-III cities are now opting for high-end travel experiences, especially to destinations like Dubai, Bangkok, and Riyadh,” said Aloke Bajpai, Group CEO, Ixigo.
As expected, the demographic group which is driving demand are the millennials (ages 27-42), currently accounting for 48 per cent of overall market growth with a focus on both established heritage brands and emerging luxury labels.
HNI (High-Net-Worth Individuals) are the second most influential group which contributes 32 per cent market growth, purchasing ultra-luxury items above Rs 25 lakh. “The growth in the number of luxury consumers was around 11-12 per cent historically,” said Kakwani.