As the Covid-19 pandemic hit India in 2020, the luxury sector was one of the hardest hit. With lockdowns across the country, and malls and high street stores shut, the crisis hit the industry badly. According to estimates by Euromonitor International, the Indian luxury goods market took a deep 33 per cent hit and fell to $5 billion in 2020 as the pandemic took its toll. But today, over a year later, as we enter the festive season in 2021, things look vastly different. With the government’s massive vaccination effort gathering momentum, and the debilitating second wave of the pandemic behind us, India looks set to get back to a path to recovery. The Reserve Bank of India (RBI), in its latest monetary policy statement, has also retained its FY22 growth forecast of 9.5 per cent, the level it had estimated in its June policy. By the RBI’s reckoning, domestic economic activity has started normalising as the second wave ebbs and the economy reopens again.
This optimism is being witnessed in ample measure in the equity markets as well. The benchmark S&P BSE Sensex has gained a hefty 48 per cent in the past year. In the current calendar year alone, the Sensex is up nearly 26 per cent. Not surprisingly, Business Today’s quarterly Business Confidence Index, the findings of which we bring you in this issue, shows a sharp upturn in business confidence to 49.6 in the July-September quarter, a 10-quarter high.
In tune with this overall feel-good environment, India’s luxury market is witnessing a major revival. High street stores and luxury malls are crowded with shoppers once again, and the big spenders are trooping back like never before. The luxury market, according to Euromonitor, is likely to touch $6 billion in 2021, but it will not be until 2023 that the sector gets back to the pre-Covid-19 levels. That’s not something the luxury market is worrying about, as the urge to splurge takes over, and segments from high-end watches to cars to jewellery and luxury real estate see a strong revival. And, as Smita Tripathi writes in the opening essay in this special Luxury Issue, the restrictions on foreign travel have also led to the big spenders turning to the Indian market to satiate their need to own the big brands. The fact that India is expected to see a massive 63 per cent growth in the number of ultra-high net worth individuals by 2025, according to Knight Frank estimates, can only help fuel this boom. Consequently, Statista estimates India’s luxury goods sector will grow at a nearly 11 per cent compound annual growth rate between 2021 and 2025.
Making the most of this big spending surge are companies like Reliance Brands Ltd (RBL), which has over 60 luxury brands in its kitty. As Krishna Gopalan’s story tells us, RBL has in its fold global brands like Brooks Brothers, Hugo Boss, Ermenegildo Zegna, Canali and many others which it has brought into India by way of a mix of structures—joint ventures, licence agreements, private equity investments and others.
As optimism returns and the queues outside the luxury malls get longer, India can, perhaps, afford a smile in the festive season as it emerges from the pandemic.
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