Lack of infrastructure is affecting the growth of luxury industry in India, which is expected to touch USD 14 billion mark in the next three years, a survey has said.
New Delhi: Lack of infrastructure is affecting the growth of luxury industry in India, which is expected to touch USD 14 billion mark in the next three years, a survey has said.
About 95 percent of chief executive officers of global luxury industry said lack of adequate infrastructure has been affecting their growth in India, said the survey which was jointly done by Assocham and Yes Bank.
"Lack of premium retail infrastructure in India and high rentals are impacting expansion plans and bottom-line margins of the these companies," the survey said.
Assocham and Yes Bank claimed they surveyed about 300 international business leaders and stakeholders representing the global luxury industry from France, Italy and the UK, during August-November this year.
Some of the significant players across various verticals who participated in the survey included Gucci, Christian Dior, Louis Vuitton and Hidesign.
Besides, the survey said high duties, varying tax structures, bureaucratic delays, red-tapism, exchange rate volatility and imposition of caveats are other challenges which are being faced by these brands.
It said the Indian market size for high-end products and services is expected to touch USD 14 billion in the next three years from over USD 8 billion, presently, on the back of rising per-capita income and evolving consumer trends.
Though majority of international retail companies still view the recent decision to allow 100 percent FDI in single-brand retail with a certain amount of apprehension and awaiting further clarifications regarding the same, it said.
Highlighting the feasible solutions, the CEOs said, "Proposed FDI reform is a golden opportunity to provide the much-required impetus to the still nascent luxury sector in India. This should be followed by lowering import duties to make luxury business more sustainable in India."
Further, the study said that considering the innate knowledge and expertise a local partner would bring along, majority of CEOs said joint venture is the preferred route of entry for international brands in India.
While about 26 percent said that wholly-owned Indian operations is a preferred medium for the entry, it said.