India (Commonwealth Union)_ India is poised to witness the fastest growth in the world in its ultra-rich population, with the number of ultra-high-net-worth individuals (UHNWIs) expected to rise by 50% between 2023 and 2028, according to a joint report released by McKinsey & Company and the Business of Fashion (BoF). This surge places India ahead of all other nations in UHNWI growth, including Japan, which holds the second-largest share in Asia. The report, titled The State of Fashion: Luxury Edition, attributes this extraordinary trajectory to a combination of demographic shifts, rising disposable incomes, and structural changes in India’s economic landscape. It anticipates that India’s luxury market will expand at a robust pace of 15–20% in 2025, making it a focal point for global luxury brands seeking growth.
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Supporting this growth is a rapid expansion in luxury infrastructure across India’s tier-one cities. The emergence of high-end retail destinations such as Mumbai’s Jio World Plaza and the soon-to-open Galeries Lafayette in Delhi is expected to enhance the visibility and accessibility of luxury goods. These developments signify a growing appetite for premium products among India’s affluent consumers. Despite the domestic Goods and Services Tax (GST) on luxury items remaining steep at 28%, recent policy changes, particularly the increase in import duties on goods priced above ₹700,000 (USD 8,400), may encourage a shift toward domestic spending. Such changes could further benefit India’s homegrown luxury segment and offer global brands greater incentives to localize operations.
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In contrast, Japan’s luxury market, while still significant, is expected to grow at a slower pace of 6–10% in 2025. The growth in Japan will largely be driven by a stable domestic base and increased tourism. Although Japan is projected to see a 12% increase in UHNWIs between 2023 and 2028, this is substantially lower than India’s projected growth rate. Adding to India’s economic momentum, NITI Aayog CEO B.V.R. Subrahmanyam recently confirmed that India has overtaken Japan to become the world’s fourth-largest economy. Drawing from International Monetary Fund (IMF) data, he stated that India’s GDP has crossed the USD 4 trillion mark, slightly edging past Japan’s estimated USD 4.186 trillion. The IMF’s April 2025 World Economic Outlook also forecasts India’s nominal GDP for fiscal 2026 at approximately USD 4.187 trillion.
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The report also reflected on the recent performance of the global luxury industry. Between 2019 and 2023, the sector witnessed remarkable growth, driven by strong demand for personal luxury items such as fashion, handbags, and watches. This increase resulted in a compound annual growth rate of 5%, helping brands surpass global market benchmarks and set new profitability records. However, 2025 has seen a marked slowdown. For the first time since 2016 (excluding the pandemic-hit year 2020), luxury value creation has declined. Key growth engines, particularly in China, which had previously enjoyed 18% annual growth, have faltered due to macroeconomic pressures, casting uncertainty over the global luxury sector’s near-term outlook. However, India, with its growing affluent class and changing luxury landscape, continues to be a promising future for the industry.
