India's Luxury Barrier: High tariffs spur French fashion 'Shopping Tourism'
18 November 2025, Mumbai
The Indian luxury market, projected to hit US$12.1 billion in 2025 and nearly triple to US$35 billion by 2030, presents immense potential but is fundamentally challenged by excessive customs duties on imported apparel and accessories.
The customs 'Leakage' and price arbitrage
Despite strategic market entries, such as Galeries Lafayette's Mumbai store (developed with the Aditya Birla Group and targeting €20 million in initial annual sales), high tariffs are causing a "leakage" of consumer spending. The core issue is price arbitrage: a French luxury handbag can cost 30–40% less in Dubai. This differential compels affluent Indian consumers to undertake "shopping tourism," making US$300 return trips to Dubai for purchases, a clear sign the current pricing structure is uncompetitive. The conclusion of the stalled India-EU Free Trade Agreement is seen as critical, with experts noting it would deliver a "real boost" by potentially eliminating these duties.
Cultural adaptation and digital countermeasures
Beyond the fiscal barrier, French apparel brands must also tackle India's deep-rooted cultural identity, where traditional wear still dominates premium occasions. This forces brands like Dior and Chanel into a hybrid strategy: they must adapt by collaborating with local designers and Bollywood influencers to integrate Indian aesthetics. Simultaneously, the digital channel offers a crucial countermeasure. With the Digital Fashion & NFTs segment being the fastest-growing in the luxury fashion market, French labels are leveraging India's 900 million internet users to bypass physical retail constraints and directly engage consumers, even as they wait for tariff relief. The dual pressure of adapting products to local tastes while overcoming the cost hurdle remains the central challenge.
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