Stiff competition has seen the emergence of new products. From just creams and moisturizers in the skincare segment, there has been an upgrade to under-eye wrinkle removing creams, dark circle removing creams, toners, sunscreen lotions, and many more. New colour cosmetics like smudge-proof lipsticks, liquid lip colour, long-stay lipsticks, and mascaras have been introduced. These specialized products have increased the cosmetics volume and enabled companies to price the new products at a premium, driving up value growth.
But, India is a very price sensitive market, and prices of most foreign brands are fairly high. Foreign brands have focussed only on urban women in the middle and upper income groups. Industry estimates suggest that there are close to 10 million such women in India. But even this group may not fork out large amounts in case equally good cheaper options are available. Therefore, for foreign cosmetics to expand their base in India, they need to evolve innovative strategies to suit Indian preferences and budgets.
The presence of a grey market in India for cosmetics and toiletries coming from Dubai and Singapore is another threat to foreign brands since they are able to market international brands at comparatively much lower prices.
Another ground for high costs of foreign cosmetics is the large import duty. The cost of importing products is much higher than producing it in the country. India allows entry of imported cosmetics without any restrictions, but the average import tariff of 56.8 percent makes products prohibitively expensive for most consumers. Therefore, most foreign cosmetics companies selling premium brands have failed to generate sales volume.
According to estimates of industry experts and trade publications, India ...