IndiaRetailBiz

Most global luxury brands like Louis Vuitton, Hermes, Jean Paul Gaultier and Gucci, Tag Heur, Espirit, Armani, Gabbana, Escada, Dunhill are betting big on India. This was evident from the views expressed by the premium luxury goods retailers during the conference on the subject held a few months ago at New Delhi by the HT-Mint. The conference was inaugurated by Commerce & Industries Minister Kamal Nath.

Why are luxury brands betting so big on India? Why, despite hurdles, are they rushing in to set shop in the country?

Well, India is set to become the major growth driver for these goods in the coming years as reflected from the rapid growth in the number of dollar denominated high networth millionaire individuals in the country. A dollar denominated millionaire is defined as an individual who owns net assets worth at least one million dollars (over Rupees Four Crore), excluding the value of the primary residence.

The eleventh ‘World Wealth Report‘ prepared by global investment banking giant Merrill Lynch and consultancy major Capgemini, has estimated the number of high networth individuals in India who own at least one million dollars in net assets in 2006 as 1,00,015. This represents 20.5% increase over the previous year, second only to Singapore where the rate of growth during the year was 21.2%. Much of this growth is attributed to growing economy (8.8% increase in GDP in real terms) and 47% increase in sensitive index (Sensex), during the year. Not surprisingly, 55% of the high networth individuals’ assets in 2006 were invested in stock markets (31%) and commercial realty (24%).

Of course, India despite such a stupendous growth in the number of its dollar denominated millionaires, has yet to catch up with the world as number of such individuals in the country is abysmally low; just above one per cent of the world’s total of 9.5 million. Over 30%, or 2.92 million, of the 9.5 million dollar denominated millionaires live in the U.S.A. Interestingly, these 9.5 million dollar denominated millionaires hold ( $37.2 trillion) about a quarter of the world’s total wealth, which is about three times the GDP of the United States. This translates into an average $3.916 million per individual; sufficient to own about a dozen Rolls Royce cars or about one hundred Cartier watches costing over Rs. four lakhs each.

Incidentally, China has performed quite well on this account as well. Against India’s one lakh millionaires, in 2006, it had 3.45 lakh millionaires. The annual growth of the wealth of the world’s high networth millionaire individuals is likely slow down to 6.8% in the coming years. The report estimates collective wealth of millionaires in 2011 at $51.6 trillion.