Luxury brands are finding it difficult to expand in India, despite the country’s fast-growing economy and population of 1.4 billion.
India currently has only three Louis Vuitton stores, while mainland China has more than 60. Annual luxury sales in India total around $1 billion, compared with $45 billion in China, according to consulting firm Bain & Company.
The challenges in India come as luxury markets in China and the United States weaken. LVMH, the world’s largest luxury goods company, reported a 3 percent drop in U.S. sales in the first quarter of 2025. Sales in Asia, excluding Japan, fell by more than 10 percent. Globally, luxury sales are expected to decline by 2 percent this year, after two decades of steady 6 percent annual growth.
India’s limited urbanization is one major barrier to growth. Only about one-third of the population lives in cities, which restricts access to high-end retail. The country has just eight luxury malls, and many top brands still operate from hotel lobbies rather than flagship stores. A dedicated luxury retail district, similar to Fifth Avenue in New York or Bond Street in London, has yet to emerge.
High import taxes also discourage local luxury spending. These duties can increase prices by about 50 percent, prompting many wealthy Indians to make luxury purchases abroad, where goods are more affordable.
Some analysts believe cultural factors may also play a role. India’s consumer base may be less focused on individual status symbols, and strong domestic brands in clothing and jewelry meet much of the demand for premium products.
Middle-class consumers, who spend less than $2,240 per year on luxury goods, now account for more than half of the industry’s global sales. But many of these shoppers have pulled back. According to Bain, the luxury sector has lost 50 million customers since 2022. Rising prices are a factor: the lowest-priced women’s sneakers on Gucci’s U.S. website currently sell for $790, up from $550 in 2020.
Other markets, including Saudi Arabia, are being explored for expansion. However, even if planned retail developments succeed there, sales would only match those of Germany, analysts say.
With no clear replacement for China or the U.S., many experts believe the industry’s best hope lies in reviving middle-class spending in those key markets.
According to a report by The Wall Street Journal, the luxury industry has yet to find another market that combines rapid economic growth, urban density and consumer appetite as effectively as China did during its boom years from 2009 to 2019. While India has potential, its consumer spending patterns have not yet followed the same trajectory.