Here we go again. Another year. Another series of luxury conferences, meetings, discussions, conclaves and gatherings. And another three dozen opportunities to sit with luxury brand managers and chief executives all over the world and discuss “the Indian market”.
Those are not just regular quote marks I’ve used there, but full-fledged, eye-rolling, ironic, mildly dismissive air quotes.
This is because I am beginning to feel that “the Indian luxury market” is something of a semi-mythical beast. Everybody is certain that it exists. It has to. Nothing else would explain the thronging masses at luxury stores, such as Hermes, in Mumbai.
But then why is the market so elusive? Why do so many brands say they have frankly no idea how many Indian customers they have? Why do they always have to qualify their Indian market estimates with the phrase “but this does not include sales in Singapore, Hong Kong, London, Dubai…”
Why is the Indian luxury market so…ethereal?
In this month’s issue of Mint Indulge, Michel Negrier of the Domain Baron de Rothschild wines tells us that his company would be selling a lot more wines in India if only the tax structure was a little more forgiving.
He is not the first person to point this out. It is the single most common observation that is made about the Indian market whenever it is discussed completely.
Now this magazine isn’t in the business of lobbying for reform, but the current tax structure on several luxury goods, watches among them, simply make no sense. They are bad for the sellers, the buyers and, ultimately, terrible for the government.
Two years ago, I interviewed a Delhi-based luxury retail consultant for this newspaper. This was a gentleman who had spent many years bringing luxury brands to India and nurturing them. After our on-the-record interview, I asked him what he really thought of the Indian luxury watch business off-the-record.
Officially, he said, the Indian watch market is one-fortieth the size of the Chinese. Unofficially, however, it is one-tenth. This means, according to him, three out of every four watches sold in India are partly or wholly smuggled in. These watches are sold without papers or records. And bought or sold for wads of hard cash. The government, he said, had no idea how much tax was being evaded. Customers, meanwhile, had no idea how many of them were taking home fakes or used watches.
He said that the government just had to do one single thing that would completely restore normalcy: rationalize taxes. It would improve compliance, reduce smuggling, and even encourage young, new retailers to pop up.
Maybe that should be one of the government’s resolutions this year: a more sensible tax strategy to this huge hole in India’s retail sector.