The Indian luxury market that is likely to clock a compound annual growth rate (CAGR) of 25 per cent, will blossom in the next two to three decades, according to Amitabh Kant, CEO of National Institution for Transforming India (NITI Aayog). The luxury sector is expected to grow from about $14.7 billion in 2015 to close to $18.5 billion this year. “We are just at the beginning of the curve and I think this market will grow and blossom in the next two-three decades. The introduction of goods and services tax (GST) will also provide India a huge competitive advantage to India’s luxury sector,” said Kant while inaugurating the associated chambers of commerce and industry of India (ASSOCHAM) Luxury Summit. Sheer social demographics, growth of the economy and rise of the very young population will fuel growth and enable growth of a huge luxury market in India. The country is currently growing at the rate of 7.6 per cent and the challenge is to record a growth rate of 9-10 per cent per annum for the three or more decades, according to Kant. “India’s luxury sector is dogged by various challenges like extremely high rents in tier I cities which has led to very diminishing space. For the luxury market to grow, we need to provide space at extremely low cost and I think that fortunately my view is that, with demonetisation land prices will fall over a period of time and that will give a further push to the growth of luxury market,” added Kant. Kant also said that it is important for India to create its own brands in the luxury market as brands give real values over a period of time. Expanding the luxury market in tier II and tier II cities can also help with the sector’s growth and it is also necessary to enable unique designers and craftsmen to grow within the country. India is also passing through a demographic transition as 72 per cent of the country’s population is below the age of 32, a transition similar to the one that happened in Europe during 1946-64. Kant said that rarely has this happened in the history of the world when you have a very young population, when you pass through this window of demographic transition that the luxury market does not grow. “This to my mind is the most important economic and social trend that is taking place across the world, the population in Europe and America is getting older, they all are retiring while the population in India is getting younger and will keep getting young till 2040 and therefore the luxury market will keep going up,” continued Kant.
