What is Indian art market? Is there even a ‘market’ or a collection of galleries and auction houses undertaking some trading activity for an exclusive set of buyers?
To put it in perspective, Indian art market presents a fraction of the estimated global market of $50bn (Art Basel 2020 Report, down from estimated $60bn in 2019 due to pandemic). At a best guess estimate, it accounts for less than 1% of the thriving business happening in the US, Europe, and increasingly from Greater China (China, Hong Kong).
The pandemic conditions of reduced mobility and volatility of equity markets worldwide, shifted the focus to a broader digital footprint for buying and selling art. It also reinstated the resilience of art as an alternative asset for investment. New products such as NFT (Non-Fungible Tokens) further obliterated the lines between art, digital economy and new age investment models.
In this cornucopia of activity and excitement about change and opportunities, India remains a small footnote. The question arises why the country has not been riding the wave of this change, considering its strong digital and ecommerce sector, as well as the fact that in spite of the last few years of slow economic growth, Indians are estimated to grow in wealth at the faster pace than the rest of the world (Knight Frank Wealth Report 2021).
One of the key reasons is that India has not had a broader history of viewing art (and collectibles) as instruments of investment and asset building. In the wave of economic growth post 1990, the focus has been to build the traditional asset classes such as real estate and infrastructure. With fewer avenues for personal portfolio diversification, the wealth has largely poured into stock market (which continue to see extreme highs) and the old Indian favourite gold. An old report from Kotak Bank of where Ultra High Net worth Indians spend their money indicated that approximately 5% of the portfolio allocation was for art and collectibles’, which include luxury cars, watches, high end designer bags etc. The fact that this report hasn’t been updated, or that there is a lack of similar period analysis also indicates low priority for arts as an investment in India.
Deloitte’s Art and Finance Report for 2021 succinctly captures the interconnected and deep relationship between the art and finance sectors in developed markets.
Source: Deloitte Art and Finance Report 2021
For the market to grow, and for the country to truly realise the potential of the wealth of art and artists it holds, there is a need for a greater activity of buying and selling of art. This at its basic level is what drives the market to grow and to become institutionalised. Indians, apart from a small elite population, hesitate to buy art. This is primarily because there is little information on what is being offered, how is it valued or what might be its growth potential in the future.
Developed markets, Americas and Europe, benefit from the established setups which are supported from both market forces including galleries, auction houses and art fairs, as well as institutions such as museums, foundations and research centres. Greater China has also seen a explosion of growth on the back of furious auction house activity. Institutional growth is following this pace with the establishment of many private museums, funded by China’s new wealthy elite.
There is reason to believe that India should follow the same trajectory, but it can only gain traction if people understand that art is a good buy for disposable income and have access to comprehensive and transparent information on what they are buying.
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