Ambani vs Birla: Race for India Luxury Market

Ambani vs Birla: Race for India Luxury Market

Why in News?

India’s luxury market is accelerating rapidly, and two corporate powerhouses—Reliance’s Ambani-led retail empire and the Aditya Birla Group—have emerged as key rivals. With analysts at Kearney projecting the sector to grow from $7.7 billion in 2023 to $12 billion by 2028, the competition is intensifying.

Evolution of India’s Luxury Market

• Structural Expansion: India’s luxury goods sector has expanded rapidly over the last decade. In 2024, its value reached approximately US$ 10.01 billion. As more Indians earn higher incomes, their discretionary spending on premium products has increased. The number of affluent households and high-net-worth individuals (HNWIs) is growing steadily. 

• Urbanisation: Urbanisation in India is proceeding at a fast pace. As people move to cities, they adopt new lifestyles, embrace modern consumption patterns and show interest in status-driven products. This concentration of wealth and retail infrastructure in urban areas makes luxury goods more accessible to the target buyers.

• Aspirational Youth: A growing number of Indians, particularly among the younger generation, are aspiring for upward mobility. Estimates suggest that the number of Indians earning above a certain threshold will jump from around 60 million in 2023 to about 100 million by 2027. 

• Luxury Brands: Global luxury and premium brands are increasingly entering or expanding in the Indian market. This influx introduces new product categories, global design aesthetics, and international luxury standards to Indian consumers. As Indian buyers become more aware of global trends, their preference for international luxury labels grows. 

• Consumption Patterns: Digital platforms and e-commerce have opened new avenues for luxury consumption in India. Many consumers now discover, research, and even buy luxury goods online. This enhances accessibility, especially for those living outside major metros or Tier-1 cities. The rise of internet penetration and social media awareness helps luxury brands to reach younger, tech-savvy buyers.

Reliance vs Aditya Birla: Shaping India’s Premium Retail Landscape

• • Business Models: Reliance Retail targets scale across categories and price points. It buys or builds large store networks and adds luxury partners to its portfolio. Aditya Birla Fashion & Retail focuses on brand depth and segment focus. It splits mass market labels from premium and luxury labels to sharpen strategy.
  • Acquisitions: Reliance uses heavy investments to gain fast reach. The company raised equity and opened thousands of new stores in recent years to scale retail footprint and buying power. Aditya Birla uses selective acquisitions and demergers to free capital for premium brands. The Birla group demerged some mass market operations in 2024.

• Brand Portfolios: Reliance mixes international luxury names with mass premium labels. The group hosts more than eighty international partner brands across segments. Aditya Birla owns a bouquet of Indian and global labels. It runs heritage brands and premium labels like Ralph Lauren and niche Indian designers.

• Partnerships: Reliance forms joint ventures and exclusive distribution deals to speed market entry. The company recently formed a partnership to expand a UK retail brand’s presence in South Asia. The company also partnered with Gucci and Dior. Aditya Birla partners with global department stores and designer houses to launch curated retail formats. Recently Birla group partnered with Galeries Lafayette to compete. 

• Omnichannel: Reliance links its large store base with a strong digital platform and customer data. The group pushes omnichannel retail and loyalty integration. Aditya Birla invests in dedicated online platforms for premium labels and in experiential stores.

Comparisons of Reliance & Aditya Birla Product Lines

• Reliance sells clothes through Reliance Trends and AJIO. Reliance runs thousands of stores across India and sells both private labels and licensed brands. Aditya Birla sells clothes through ABFRL and Pantaloons. ABFRL owns legacy brands like Louis Philippe, Van Heusen, Allen Solly, and Peter England. ABFRL also operates The Collective for premium labels.
• Reliance signs exclusive deals to bring global luxury names to India. Reliance operates a licensing and distribution arm called Reliance Brands. Reliance lists international labels Balenciaga, Burberry and Tiffany & Co on Ajio Luxe and in flagship stores. Aditya Birla secures selective international licenses. ABFRL holds partnerships with brands such as Ralph Lauren, Fred Perry and others.
• Reliance builds large private label assortments across price tiers. Reliance scales low to high price ranges quickly. ABFRL builds deep private labels in specific segments like formal wear and ethnic wear. Reliance uses scale to offer competitive prices and wide assortment. ABFRL uses brand heritage to charge premium margins.

Policy Support Influencing Luxury Retail Growth in India

• Foreign Direct Investment (FDI): The Indian government allows 100% FDI under the automatic route for single-brand retail. This rule enables international luxury brands to set up wholly owned stores in India without needing a local partner. The relaxed norms lowered entry barriers.

• Customs Regulation: Imported luxury goods enter India under high customs duty regimes. Many luxury products face duties ranging from 20% up to 50% or more depending on category and origin. This high import burden keeps the retail price of imported luxury items elevated compared to global rates. This often makes Indian retail less competitive against overseas buying and travel-shopping.

• GST Reforms: The tax system under Goods and Services Tax (GST) treats luxury items differently from essentials. Until 2025 many luxury fashion, accessories and imported items attract high tax plus import duty. High overall tax incidence constrained consumption demand for non-essential luxury goods. The dual burden (import duty + GST) increased retail prices significantly.

• Ease of Doing Business: Over time India has improved its business-permit environment, which helps organized luxury retailers. The regulatory simplification and retail-authorization procedures have become more streamlined compared to the past. This shift reduces bureaucratic delays and lowers entry cost for premium retail firms. As a result luxury retailers find it easier to open stores in India.

Future Outlook

• India’s luxury industry is moving into a transformative decade. Analysts expect the sector to reach around USD 12 billion by 2028 as more global brands enter the country and domestic conglomerates expand premium offerings.  
• Reliance and Aditya Birla remain central players. Tata and other emerging luxury investors are also exploring this space. The next phase will test how each group adapts to a more demanding and more informed consumer base.
• Market risks remain significant. High import duties raise the retail prices of luxury goods. This keeps many buyers dependent on overseas shopping. Luxury retailers face foreign exchange fluctuations that affect cost planning. Policy changes in duties and taxes could influence profit margins.
• Consumer behaviour will shape the next phase of growth. Young Indians prefer modern designs, global trends, and strong digital engagement. This shift will push brands to blend physical stores with technology-driven experiences. 
• Infrastructure development will support the road to a USD 12 billion luxury economy. High-end malls in Mumbai, Delhi, Bengaluru, and Hyderabad will add new luxury zones. Tier-2 cities will contribute more to sales because wealth is spreading beyond metros.