Despite a robust 40% growth last fiscal year, CRISIL Ratings predicts a 15% YoY revenue rise in India’s luggage industry this fiscal. This is attributed to the increased adoption of hard luggage from the organized sector and the ongoing growth in tourism and corporate travel.
Demand for hard luggage has improved operating efficiencies in the organised sector, potentially leading to a 150-200 basis points (bps) YoY increase in operating margin to 16% this fiscal. While a 20% decline in key raw material prices—polypropylene, polycarbonate, and polyamide—could have further bolstered margins, more investment in marketing by organised players was needed.
Main raw material costs, constituting 40-45% of luggage makers’ expenses, are influenced by crude prices. Despite capacity expansion projections, enhanced profitability and balanced balance sheets will bolster credit risk profiles. Organised luggage manufacturers generate around 40% of the industry’s annual sales of INR 15,000 crore (US$ 1.81 billion). They benefit from reliable sourcing, competitive pricing, higher quality, and extended warranties.
The shift towards hard luggage, driven by its aesthetics and durability, is supported by their lighter weight—a key factor for travel. Consequently, organised manufacturers are strategically transitioning revenue mix from soft to hard luggage in retail and online spaces.
According to Ms. Jaya Mirpuri, Director at CRISIL Ratings, the market share of hard luggage surged from 33% to 55% over the last five fiscal years. Operating margins are more favorable since these items are domestically manufactured.
Additionally, Mr. Rushabh Borkar, Associate Director at CRISIL Ratings, indicated that apart from doubling capacity, organised manufacturers plan to expand retail presence by 35-40%, entailing a fiscal capital expenditure of INR 700 crore (US$ 84.5 million).
