India is the world’s largest democracy and is home to the second largest population (over three times that of the United States). It boasts a $4 trillion dollar GDP (PPP), which the International Monetary Fund projects will grow by nearly 9 percent in 2011. The Indian economy is among the fastest growing globally, which is producing an emerging middle class with more disposal income. While restrictions on foreign direct investment still exist in many industries, privatization and a gradual openness to foreign investment has started to tie India into the wider global economy.
India’s luxury goods market in particular (around $800 million in 2010) is growing. This spells opportunity for companies and manufacturers in Europe and the United States. Previously, Indians largely bought luxury goods abroad, rather than in India where import tariffs made the products considerably more expensive. Tariffs are beginning to fall, however, which means more luxury brands see value establishing presences in India, particularly in Delhi and Mumbai, both major metro areas.
Similar to India, high import taxes in Brazil drive consumers abroad – to the United States – to buy luxury products. Check out our analysis of the luxury good markets in Brazil, China and other regions.
Exports from other countries are helping fuel the luxury consumer demand. Trade and commerce between India and the United States, for example, has grown rapidly over the last 20 years. The bilateral trade in merchandise goods reached $48.75 billion in 2010. Despite the international turmoil in Q1 2011 (i.e., the earthquake, tsunami and nuclear disaster in Japan, the widespread revolution in North Africa, and rising oil costs), trade between India and the United States remained strong – $12.49 billion total between January and March.
In Q1 2011, over 20 percent of all exports to India from the United States were jewelry and precious stones and minerals. European brands in Spain, Italy and elsewhere are also targeting the Indian luxury demand. With a growing brand consciousness among India’s new middle class, the demand for these products is certain to grow.
HOW AA CARGO CAN HELP
High-value cargo – like jewelry and precious metals – is usually moved by air cargo. The growing demand for luxury products in India means more companies and manufacturers need air cargo partners with access to not only Asian markets but also, the manufacturing and logistics centers that satisfy it.
American Airlines Cargo operates daily scheduled 777 service between Chicago and Delhi and with a wide network and interline partnerships intra-India, American helps move high-value goods from throughout the world to the growing Indian market.
Check out the Market Analysis homepage to see an interactive map of other key luxury good markets.