Cosmetics to India

Trends and opportunities

  • A significant proportion of India’s population are young, part of the rapidly growing middle class, and fashion savvy. Cosmetics are no longer a niche segment;
  • The synergy between health and beauty is partly driving a trend towards organic products in personal care: organics accounts for close to one-third of the personal care category;
  • Male grooming is amongst the fastest growing categories with an explosion in product range targeted towards men in the middle and upper income groups
  • Evolution of Omni-channel retail in India.

In an era of selfies, video calls and profile picture driven social media, the need to look good in India is no longer confined to special occasions. In fact, both men and women are drawn to the need to look good, and the prevailing obsession with healthcare and wellness. As a result, the beauty industry in India is growing in scope and breadth.

Austrade’s view of the market is that with the rise in disposable income and growing aspirations to look good, consumer demand for more brands and categories is at an all-time high. Consumers are also looking for innovative new cosmetics brands that demonstrates a strong concept and unique ingredients and consumers are influenced by the whole product (functionality, packaging, and appeal). Brand awareness and brand education is extremely important.

The market

The Indian cosmetics industry is categorised into various segments that includes skin care, hair care, and oral care, fragrances, and colour cosmetics. The cosmetics industry is currently valued at US$ 6.5 billion and is expected to grow to US$ 20 billion by 2025 with a CAGR of 25 per cent. In comparison, the global cosmetics market is growing steadily at 4.3 per cent CAGR and will reach US$ 450 billion by 2025. It is expected that that by 2025 India will constitute 5 per cent of the total global cosmetics market and become one of the top 5 global markets by revenue. (Source: Economic Times, https://economictimes.indiatimes.com/industry/cons-products/fmcg/cosmetics-market-to-grow-by-25-to-20-billion-by-2025/articleshow/62838360.cms).

With improving purchasing power, the demand for enhanced cosmetics has attracted several Indian brands to India including Mac Cosmetics, Avon, Estée Lauder, L’Oreal, and Wella professionals across various retail formats.

By 2020, a pool of luxury brands such as Labiocos, Bodyography, and Victoria’s Secret are expected to launch their products in India. Social media and demographics are playing an important role in spreading awareness about cosmetics products and developing fashion consciousness in metropolitan and tier1 and 2 cities across India.

Imports of cosmetics and personal care products and intermediate raw materials to India as of 2016 was valued at US $790 million. France, Germany, UK, China, and the United States have been the traditional suppliers with growing imports to India from Japan, Hong Kong, Malaysia, Thailand, South Africa, and Israel in the recent years (Source: US Commercial Service, https://www.iaccindia.com/userfiles/files/India%20-%20Cosmetics%20Imports%20&%20Regulatory%20Aspects.pdf ).

Tariffs, regulations and customs

All cosmetics products imported to India will have to be registered with the office of the Central Drugs Standard Control Organization (CDSCO) in the office of the Drug Controller General of India (DCGI). The DCGI’s office administers the Indian Drugs and Cosmetics Act of 1940, which governs the manufacture, sale, import, export and clinical research of drugs and cosmetics in India. Visit DCGI for more information

The fee for registration is US$ 250 per brand of cosmetics applied for, which may include any number of variants, colour, shades or pack sizes. The duration of a registration certificate is for a period of three years from the date of its issue unless it is suspended or cancelled sooner for any reason.

India allows import of cosmetics into the country only through specified ports of entry, which includes: Chennai, Kolkata, Mumbai, and Cochin sea ports; and Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Ahmedabad airports. India has imposed a ban on the animal testing of cosmetics, and the same provisions are also relevant for all cosmetics products imported into India.

The total customs duty for cosmetics (based on HS code: 33049990, 33041000, 33049190) will be around 40.28 per cent.

Marketing your products and services

India is one of the fastest growing consumer markets in the world, moving from unorganized informal markets to organised retail in major Indian cities as well as tier 2 towns and cities. Cosmetics and personal care products, is one of the fastest growing consumer product categories and offers strong potential for Australian companies.

It is Austrade’s contention that the Indian beauty market is evolving, and offers Australian brands a longer term opportunity especially in the growing organic cosmetics category.

The image of Australia’s ‘clean and green’ production and supply environment will help in the promotion of Australian beauty and wellness product exports to India.

Distribution Channels

The most effective way to enter the Indian market is to work with local distributors and agents, who normally contribute not only to the sales and marketing, but most importantly to brand building activities and sustainable development of the brand in the market. Another channel to consider is online and e-commerce platforms such as beauty and cosmetics e-commerce websites like Nykaa, NewU, Purplle, etc. are leading the space with a focus exclusively on beauty and wellness products. Large e-commerce giants like Amazon and Flipkart (now to be owned by Wal Mart are now exploring to the online beauty space. The online cosmetics market in India is currently valued at US$ 50 million contributing to 2 per cent of the total Indian cosmetics market (Source: Red Seer Consulting, http://redseer.com/articles/redseer-perspective-on-indian-cosmetics-industry/).

International players are likely to encounter challenges in India that includes high import duties, long gestation periods for product approvals, competition from domestic manufacturers and high cost of retail real estate for international brands in India. But despite the challenges India remains a significant, stable and longer term export market opportunity for Australian beauty brands which are looking to diversify overseas.

Links and industry contacts

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

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