'High duties, little space, labour shortage hinder luxury mkt'

Last Updated 20 April 2014, 10:06 IST

 Exorbitant duties, lack of space and counterfeit products are among the factors that are hindering growth of luxury brands in India, a study has said.

There is a dire need for modernised and dedicated luxury retail areas in protected vicinities such as airports to successfully tap demand, the study by Assocham and KPMG has suggested.

"The duties are manifold ranging from customs' duty, counter veiling duty (CVD), special additional tax and education cess adding to the overall cost," Assocham Secretary General D S Rawat said.

"Besides, setting up stores in high streets affects luxury retailers' profitability due to sky-rocketing rental costs. Moreover, high streets are very cluttered, crowded and are unsuitable due to the absence of the exclusive ambience that luxury retail demands," he added.

Luxury brands need to strategically design their growth plans to tap demand across three categories of high-networth individuals, the study said.

Moreover, shortage of skilled labour is a major cause of concern for luxury product-makers as it is difficult to make the local workforce understand the heritage and legacy of the brand along with the specific finishes involved in the manufacturing process, it pointed out.

The study noted that growing prevalence of counterfeit luxury goods and a grey market are also hampering the growth of the industry.

Most of these products belong to segments such as apparel, perfumes and accessories, which are usually lower ticket items and can be easily placed in grey channels.

Support by the government through favourable policies and strong intellectual property regime and help counter the menace of counterfeit products and attract global high-end retailers to set up shop in India, the study pointed out.

The Indian luxury market grew 30 per cent to reach USD 8.5 billion in 2013 and is likely to expand of 20 per cent reach USD 14 billion by 2016 owing to rising number of wealthy people, growing middle class, affluent young consumers and other related factors, it said. 

(Published 20 April 2014, 10:04 IST)

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