The rise of luxe aspirations in India
Luxury in India is no longer the domain of the elite. Rising disposable incomes, easy credit access, and the influence of social media have driven middle-class families to embrace premium lifestyles. Be it upgrading to a compact luxury SUV, investing in designer wear, or opting for high-tech gadgets, Indians are increasingly drawn to experiences that reflect exclusivity, quality, and status.
Younger demographics are leading this trend, prioritising self-investment in boutique fitness, gated communities, and eco-friendly products. This growing affinity for premiumisation demands policy attention not just from brands but also from the government.
Key focus areas for Budget 2025
Budget 2025 is expected to strike a balance between fostering luxe aspirations and driving inclusive growth. Key sectors that could see impactful policy changes include:
Luxury goods accessibility
To support the luxury market, the government might revise customs duties and taxes on luxury goods, making them more affordable for Indian consumers. According to Rahul Kakkad, Tax Partner – Consumer Products and Retail, EY India, “A phased approach to reducing taxes could open up the luxury market while incentivising domestic manufacturing of premium products.”
Boosting credit for luxe purchases
The demand for luxury goods is often powered by accessible financing. Budget 2025 could introduce policies that promote easier credit access, especially for millennials and small business owners. Incentivising fintech platforms to offer innovative lending solutions for premium products could sustain this trend.
Urban infrastructure investment
Smarter cities are crucial to supporting an evolving India. Investments in metro projects, smart parking systems, and high-speed internet will align urban infrastructure with a premium lifestyle. Additionally, subsidies for eco-friendly building materials and affordable luxury housing schemes could spur sustainable growth in real estate.
“The policies that encourage sustainable practices in the production and sale of luxury goods could align well with global trends and consumer expectations. These measures would stimulate domestic consumption while positioning India as a significant market for global luxury brands,” said Harsh Jayesh Ruparel, Co-Founder & CEO, Commbitz.
Supporting luxe startups
India’s direct-to-consumer (D2C) luxury segment is booming, with brands offering everything from gourmet foods to designer clothing. To foster innovation, the budget could introduce tax breaks and targeted funding for startups in the luxe space. Established players like HUL and P&G are already capitalising on this trend by acquiring niche luxury brands.
“The growing inclination of Indian consumers toward premium and luxury products will likely influence Budget 2025. The government could support this trend by rationalising GST on luxury goods, expanding Production-Linked Incentive (PLI) schemes to include luxury segments, and focusing on infrastructure that promotes premium retail experiences,” added Ruparel.
Skill development in premium services
As Indians demand better products, the quality of associated services must also improve. Budget 2025 could allocate funds for skill development in sectors like hospitality, retail, and personal care, ensuring world-class service in the luxury ecosystem.
Sustainability in luxury
The global shift toward sustainability has also influenced India’s luxe segment, with rising interest in green products such as electric vehicles and eco-friendly packaging. Budget 2025 could incentivise businesses adopting sustainable models and consumers investing in green products through tax breaks and green financing initiatives.
Indra Guha, Partner, Sustainability and ESG, BDO India, emphasised the importance of a climate finance taxonomy, stating, “A robust framework to guide investments towards sustainable projects would balance economic growth with environmental priorities.”
The luxe opportunity in Budget 2025
Budget 2025 has the potential to be a game-changer by aligning fiscal policies with the aspirations of a smarter, premium-focused population. However, the challenge lies in balancing luxe aspirations with inclusivity, ensuring the broader populace benefits from the economic growth story.
As India stands at the crossroads of transformation, Budget 2025 could pave the way for a smarter, more luxe, and sustainable nation, cementing its position as a rising global economic powerhouse.
