The Indian luxury goods market is seen expanding by 25 percent annually up to 2015 despite the global economic slowdown, said Indian industry association ASSOCHAM.
That would give the sector an annual value of $14.7 billion compared with around $8 billion now.
ASSOCHAM says worldwide consumer spending will also rise, and is forecast to be worth US$40 trillion in 2020, boosted by an unprecedented expansion of US$12 trillion in a decade.
Indian consumer expenditure is seen surging by 400 percent to $3.6 trillion in the same period, helped by rising incomes.
Meanwhile, there will be a 300 percent rise in the number of Ultra High Net worth households in the next five years with a 500 percent increase in their net worth.
ASSOCHAM Secretary General D S Rawat said, “The luxury market is poised to expand three fold in the next three years and the number of millionaires expected to multiply three times in another five years.
"An increase in spending is anticipated across the country and beyond the walls of the metros [large cities], with increasing brand awareness amongst the youth and purchasing power of the upper class in Tier II & III cities in India where luxury cars, bikes and exotic holidays and destination weddings are no strangers.”
The trade organization said that private equity investments in the luxury sector over the last three years have totaled less than US$1 billion, compared to overall private equity investments in the Indian economy of US$35 billion during the period.
“India and China have shown their resilience to the global turmoil by exhibiting sustained growth and thus laying a solid foundation for future global economic recovery," said Rawat.
"A reflection of this can be seen in the potent demand being witnessed by global luxury brands from these emerging economies. As elite members of the BRIC [Brazil, Russia, India, China] club which currently accounts for 11 percent of the total world luxury sales with a combined retail value of over US$33 billion in 2011-12, India and China are poised to undertake dominant positions in the global luxury market.
"While China is on track to become the world’s second largest luxury market within the next five years, India too is not far behind. With positive regulations and policies for the retail industry being put in place by the government along with a burgeoning middle class which aspires to own and experience luxury goods and services, India is a market that can no longer be ignored by international brands," Rawat concludes.