How Are Ultra-Luxury Brands Like Hermes Winning in India, When Others Like Gucci Are Not?

India has been sold as the next great frontier for luxury. Rising wealth, a young aspirational class, more millionaires being minted every year — the pitch writes itself. And for a while, the numbers backed it up. Luxury brands opened stores, signed Bollywood ambassadors, and posted strong growth. India felt like it was finally arriving on the global luxury map.

Then came FY25.

The annual filings with India's Ministry of Corporate Affairs told a story the press releases did not. Gucci's India revenue fell 17%. Christian Dior slipped. Louis Vuitton edged lower. Mercedes-Benz India reported its first sales decline in five calendar years. And yet, in that same market, Hermes grew 33%. Swiss watches outperformed. Indian designer labels like Manish Malhotra posted 34% growth.

Same country. Same consumers. Radically different outcomes. That divergence is the real story of India's luxury market in 2025 — and it has implications that go well beyond which brand's numbers look good this quarter.

The Numbers Behind the Story

Source: Mint

Hermes also reported its net profit climbing to ₹83.7 crore from ₹72.7 crore — meaning it grew both top line and bottom line while peers retreated.

No major global luxury brand operating in India crossed the ₹1,000-crore revenue mark in FY25. For context, that number matters: it would represent genuine scale in the Indian market. The gap between aspiration and reality remains wide.

The Post-Pandemic Boost

To understand what is happening now, you need to understand what happened just before.

Between 2021 and 2023, the global luxury industry went on a historic run. Pent-up demand flooded back after lockdowns. Aspirational buyers who had been saving during the pandemic splurged on bags, watches, and shoes. India was no exception. LVMH, Kering, and Richemont were all reporting record numbers. The story wrote itself: a rising India, a growing wealthy class, and a market hungry for European sophistication.

But that cycle had a natural ceiling. Luxury brands had been raising prices aggressively — some items within the LVMH portfolio saw hikes of up to 100% between 2019 and 2024. A Louis Vuitton Speedy 30 that cost a certain amount in 2019 had doubled in price by 2024. They were not selling more bags. They were selling the same bags at far higher prices. And for a while, that worked — until it did not.

By 2025, economic uncertainty, persistent inflation, and job insecurity had started to bite into the budgets of the one group that powered India's luxury growth the most: the aspirational consumer.

Who Actually Buys Luxury in India

Here is something that gets lost in the breathless coverage of India's luxury boom. The market was never primarily driven by the ultra-rich.

The real engine has always been the aspirational middle: the young professional, the startup founder, the corporate climber who stretches their budget to buy one significant piece a year. A Louis Vuitton wallet. A pair of Gucci loafers. A Christian Dior lipstick that costs ten times what they would normally spend on skincare.

These buyers are highly sensitive to price and sentiment. When prices keep climbing and the economy feels uncertain, they do not stop caring about luxury. They just stop buying it. Or they wait. Or they reroute the purchase through a trip abroad.

Raahuul Kapoor, co-founder of Delhi-based consultancy Luxury Ampersand Frolics, has framed it precisely: accessible luxury brands like Gucci, Burberry, and Louis Vuitton are reliant on aspirational consumers and are facing slower growth or outright decline, while ultra-luxury labels targeting high-net-worth individuals continue to grow.

Hermes is the clearest proof of that thesis. It never chased the aspirational buyer. It kept its waitlists long, its prices steep, and its supply deliberately tight — and it kept growing.

The Wedding Market Blind Spot

There is a structural issue that does not get enough attention. India's luxury spending has always been heavily anchored to weddings. The Indian wedding industry is enormous, it is growing, and it absorbs a remarkable amount of high-value discretionary spending on clothing, jewellery, and accessories.

But here is the catch: international luxury brands capture a far smaller share of that market than Indian designer houses. When a family is spending ₹50 lakh on a wedding wardrobe, most of that money flows to Sabyasachi, Tarun Tahiliani, or Manish Malhotra — not to Dior or Gucci. In fact, Manish Malhotra's label posted 34.6% revenue growth to ₹308.3 crore in FY25. Sabyasachi is approaching the ₹500-crore threshold. These are not small numbers.

As Neelesh Hundekari, Asia Pacific lead of the consumer and retail practice at Kearney, observed international luxury brands could be seeing slower growth because demand outside the wedding segment is moderating. The non-wedding market is becoming more selective and price-sensitive.

If you are an international luxury brand in India, you are fighting hard for a slice of the non-wedding discretionary spend. And that slice just got smaller — while Indian designers are capturing more of the wedding spend than ever.

The Dubai Detour (and Why Indian Purchases Disappear Offshore)

India has some of the highest import duties on luxury goods in the world, averaging 30–40% on items brought in for retail — on top of an additional 28% GST for luxury categories. The result is a persistent and painful price gap between what something costs in Mumbai versus what it costs in Dubai, London, or Paris.

When the flight to Dubai is increasingly cheap and frequent, that price gap starts to look like a round-trip savings opportunity. A bag that costs ₹3 lakh in a Mumbai boutique might cost ₹2 lakh at a mall in Dubai. Indian consumers can do that math. And many of them are doing exactly that.

This creates a structurally strange situation. India has millions of wealthy consumers who love luxury brands and are genuinely happy to spend on them. But many of those purchases never register in India's retail numbers. They happen at duty-free shops, at boutiques in Knightsbridge, at malls in the Gulf. The Indian consumer spends — but the Indian luxury market does not capture it.

The rupee's weakness adds another layer. Currency depreciation over FY25 made imported luxury goods structurally more expensive in rupee terms, even without any change in global pricing. For a brand like Louis Vuitton, whose prices are set in euros and converted, a weakening rupee quietly increases the price for every Indian buyer — without the brand making a single pricing decision.

What Hermes Understands That Others Don't

The contrast between Hermes and the rest of the field is worth examining carefully.

Gucci, Dior, and Louis Vuitton all operate on rapid design cycles — new collections, seasonal drops, logo-heavy products targeted at buyers who want to signal status. That is a legitimate luxury strategy, but it is also one that depends heavily on continued aspirational demand and cultural relevance. When either of those wobbles, the numbers follow.

Hermes operates on a different logic entirely. Its products are rooted in craftsmanship and permanence. A Birkin bag is not a seasonal fashion item. It is closer to a financial asset. The waiting list is not a frustrating quirk — it is the product itself. Scarcity, heritage, and the sense that ownership means something lasting: these are what Hermes sells.

As Kapoor of Luxury Ampersand Frolics has pointed out (as mer Mint), a growing set of Indian consumers is moving toward what he calls ritual-driven luxury — objects and experiences that speak to taste rather than simply purchasing power. For India's emerging class of ultra-high-net-worth collectors and global travellers, heritage brands align closely with gifting, collecting, and intergenerational legacy. That is a customer who does not blink at price increases and does not disappear when the economy wobbles.

Hermes has that customer. The brands that are struggling are still competing for one who was always more fragile.

Luxury Cars: The Same Divide Playing Out

It is not just fashion houses feeling the shift. Mercedes-Benz India reported its first unit sales decline in five calendar years in 2025 — volumes dipped approximately 3% to around 19,000 units, after a record year in FY25. Notably, even as volumes dipped, Mercedes reported strong revenue growth driven by the ultra-premium segment (vehicles above ₹1.25 crore), mirroring the exact dynamic in fashion: the aspirational buyer is stepping back while the genuinely wealthy continue to spend.

The luxury car market is telling the same story as the luxury fashion market: brands whose growth depended on aspirational demand are feeling the slowdown, while the ultra-high-net-worth segment remains insulated.

What This Means Going Forward

India's luxury story is not over. The wealth is real, the aspiration is real, and the pool of ultra-high-net-worth individuals is projected to grow faster here than almost anywhere else in the world.

But the easy chapter is done. The brands that coasted on post-pandemic enthusiasm without doing the harder work — building genuine local presence, managing pricing thoughtfully, engaging with India's wedding economy, and understanding what makes the Indian luxury consumer distinct — are now seeing that in their FY25 MCA filings.

The drop in Gucci, Dior, and Louis Vuitton's revenues is not just a blip. It is a signal. India's luxury consumer has grown up. They know what things cost in Dubai. They know what craftsmanship looks like. They are increasingly choosing between an international brand and a Sabyasachi — and sometimes, Sabyasachi wins.

The brands that understand India's luxury culture on its own terms are growing. The ones that don't are filing for declines and hoping next year looks different.