What: India emerges as a transformative force in global travel retail, with projected tourism spending of USD 89 billion driven by its expanding middle class and growing appetite for luxury shopping.

Why it is important: The rise of Indian tourism spending signals a rebalancing of global retail tourism, offering retailers an opportunity to diversify their international customer base beyond traditional Chinese luxury consumers.

India's growing influence in global travel retail marks a significant shift in the international shopping landscape. With McKinsey & Co identifying India as the world's fifth-largest economy and its population surpassing China's 1.4 billion mark, the country is poised to become a crucial source market for leisure travel. This transformation is driven by increasing economic prosperity and rapid growth, with projections indicating a dramatic rise from 13 million trips in 2022 to over 80 million by 2040. Indian travellers are displaying distinct shopping behaviours, particularly in luxury retail sectors.

While their spending remains moderate compared to Chinese tourists, they show strong interest in luxury goods, fashion, cosmetics, and electronics, especially in key shopping destinations like Dubai, Singapore, London, Paris, and Hong Kong. Their price-conscious approach, combined with a preference for duty-free shopping and reasonable prices on high-end products, is reshaping how retailers approach this emerging market segment.

IADS Notes: The emergence of Indian tourists as a major force in global retail reflects broader transformations in the country's economic landscape. The projection of 80 million outbound trips by 2040 aligns with India's position as Kearney's most attractive emerging market for retail expansion. This growth is supported by the expanding affluent consumer base, expected to reach 100 million by 2027, and the luxury market's projected annual growth of 15-25% through 2030.

Indian tourists' distinctive shopping behaviour, characterised by price consciousness combined with growing luxury aspirations, is reshaping retail strategies in major shopping destinations. The trend is particularly evident in cities like Dubai and Singapore, which are adapting their retail offerings to cater to Indian preferences. This shift is further amplified by the projected surge in tourism spending to USD 89 billion within three years, though spending patterns remain more moderate compared to Chinese tourists, with a stronger focus on value and tax-free opportunities.

Why Indian tourists are set to transform global travel retail