India to see world's fastest surge in ultra-rich class, up 50% by 2028

Khaleej Times

2 days ago

India is poised to lead the world in the growth of ultra-high-net-worth individuals (UHNWIs), with their population expected to surge by 50 per cent from 2023 to 2028, according to a McKinsey & Company and The Business of Fashion (BoF) report.
This meteoric rise underscores India's emergence as a global luxury powerhouse, with its luxury market projected to grow between 15 and 20 per cent in 2025, outpacing other major economies. Driven by structural shifts, demographic advantages, and expanding retail infrastructure, India's ascent signals a vibrant future for wealth and consumption.
The report highlights the proliferation of luxury real estate in tier-one cities like Mumbai, Delhi, and Bengaluru, driven by developments such as Jio World Plaza and Galeries Lafayette. These upscale malls and department stores are redefining India's retail landscape, catering to a growing affluent class. In 2024, luxury retail space in India's top cities expanded by 12 per cent, with Mumbai alone adding 1.2 million square feet of premium commercial space, according to CBRE India.
Meanwhile, new taxes on imported goods exceeding Rs700,000 ($8,400) are expected to boost domestic luxury spending, despite a high 28 per cent Goods and Services Tax on such products.
India's economic momentum further amplifies this trend. Niti Aayog CEO BVR Subrahmanyam recently confirmed India has surpassed Japan to become the world's fourth-largest economy, with a nominal GDP of $4.187 trillion in FY2026, edging out Japan's $4.186 trillion, per the IMF's April 2025 World Economic Outlook. This economic leap supports a robust luxury sector, contrasting with Japan, where UHNWIs are forecast to grow by 12 per cent and the luxury market by 6 to 10 per cent in 2025, buoyed by tourism and domestic consumption.
Globally, the luxury industry has faced challenges in 2025, with value creation declining for the first time since 2016, excluding the pandemic-hit 2020. The global luxury market, encompassing fashion, handbags, watches, and jewellery, grew at a 5.0 per cent compound annual growth rate from 2019 to 2023 but is now slowing, particularly due to economic headwinds in China, which previously saw 18 per cent annual luxury growth. India, however, stands out as a bright spot, drawing multinational companies with its vast consumer base and talent pool.
India's economic prowess extends beyond luxury. Home to one-third of the world's STEM graduates, the country is a hub for innovation in electric vehicles, pharmaceuticals, and technology. Engineering and R&D sourcing from India, valued at $44-45 billion today, could reach $130-170 billion by 2030, said the McKinsey report. India's global export share is also rising, with electronics exports to the U.S. hitting $10 billion in 2024 and projected to reach $80 billion by 2030. Overall, India's global exports could hit $1 trillion by 2030, with manufacturing's GDP share rising from 16 per cent in 2023 to 25 per cent.
Despite these opportunities, challenges persist for multinationals. India's pro-business policies are tempered by complex regulations, labor disputes, and bureaucratic hurdles. The diverse consumer base, with varied preferences and spending power, poses marketing challenges. While some companies thrive, others have scaled back operations. Yet, India's trajectory remains upward, with trade-flow shifts potentially adding $0.8-1.2 trillion to its economy by 2030.India's luxury market and wealth growth reflect its broader economic rise.
As UHNWIs multiply and retail infrastructure expands, the country is carving a niche as a global luxury leader. Investors and brands eyeing India's potential must navigate its complexities but stand to gain from its dynamic growth, the report added.