Terms of Trade: What the sale of 500 Maybachs in ‘24 says about the rich in India
India has a bigger share of super-rich than the rich in the world. This has serious political economy implications
Luxury car maker Mercedes Benz expects India to become one of the top five markets for its super-luxury Maybach segment, a senior company executive said on Tuesday. Mercedes sold 500 Maybachs in India in 2024, almost 2.4% of the 21000 it sold globally. India’s total share in worldwide Mercedes sales (19565 out of the 1.98 million cars sold in 2024) is less than one percent. Around 25 per cent of Mercedes Benz’s India sales come from top-end-vehicles which cost over ₹1 crore, the Business Standard reported. Globally, just 14% of Mercedes sales (in volume terms) came from its top-end category according to 2024 company data. Industry and sector-specific details aside, these numbers also carry an important political economy insight.
India has a larger share of super-rich — those who buy Maybachs and other top-end luxury cars — than the rich who buy relatively cheaper versions of these luxury products. This anecdotal insight is confirmed by other statistics. Take India’s disproportionate share in dollar billionaires in the world for example. An unpublished analysis of Forbes’s billionaire lists by economists Arjun Jaydev and Advait Moharir shows that India is ahead of every country in terms of the ratio of number of billionaires and per capita GDP. On the other hand, income tax data for fiscal year 2022-23 (latest available) shows that less than a million Indians (individuals or business) reported an income of more than ₹50 lakh in a year. Those with incomes of ₹1 crore or more were less than four lakhs. In a country of 1.4 billion people this is nothing. Data given in the 2025-26 Union Budget shows that just 82016 out of more than a million companies had a profit before taxes of ₹1 crore or more in the country in 2022-23. Just 743 of these companies had a share of 45% in total income and 62% in profit before taxes.
Why these numbers should matter
A lot of them, especially the billionaire number contrasts starkly with other realities, such as 800 million Indians depending on free food grain for survival, a fact often quoted by many (including government functionaries) to highlight the acute inequality in India. This column wants to ask a more provocative and difficult to answer question. Why does India have more super-rich than rich? And what does this mean for the economy? Let us digress for a moment while we try and answer this.
In September 2019, the Narendra Modi government announced a big reduction in corporate tax rates. The underlying rationale for this decision was that it would nudge companies to invest more in the domestic economy thereby helping long-term growth. While corporate tax collections have fallen behind personal income taxes in the country in the last few years, a sustained private capex recovery, and therefore growth, continues to elude the economy. Even senior government officials have publicly expressed their displeasure over private capital holding back on investment several times.
A pragmatic capitalist, however, will not invest because the government wants him to. He will only do so if it is justified by demand which requires a capacity addition in the economy. Bearish outlook over future demand results in businesses holding back on current investment, creating weakness in current demand — something that can trigger a vicious cycle. This is pretty much the crux of the problem facing the Indian economy as far as its challenge in leapfrogging from a 6% growth trajectory to an 8% one is concerned. Unless that happens, mass income levels will not improve. The demographic dividend window in India has begun to close which makes this question more urgent.
But not everybody seems to be hurting equally from the lack of demand problem in the Indian economy. Let us take an example. India’s nominal GDP in dollar terms increased by 1.3 times between 2018-19 and 2023-24 from $2.7 trillion to $3.6 trillion. India’s trade deficit with China in the same period increased by 1.6 times from $53.6 billion to $85.1 billion during this period. The implication is simple. Indians have a higher marginal propensity to buy from the Chinese than the domestic economy. It is useful to flag that oil imports are a miniscule proportion of India’s imports from China. Had it been the case it could have been justified on account of demand which could not be substituted domestically.
Between 2018-19 and 2024-25, manufacturing growth at constant prices in India was 26.5%. For financial services, professional services and real estate category, this number is 50.7%. The latter is perhaps the sub sector which is generating wealth at the fastest pace in the country. Data from the 2025-26 Union Budget support this argument. The effective corporate tax rate on manufacturing companies (22.64%) was marginally lower than that on non-manufacturing companies (23.51%). However, it is the latter that account for more than 85% of total companies in India and almost 70% of the total profits and tax liability.
What is the larger point from these numbers?
India’s manufacturing production is not insignificant. But it is not competitive enough to be able to command a significant export market or even provide import substitution. This has a put a big constraint on growth. Trade protection has helped some of domestic manufacturing players preserve their market shares or things could have been worse. Think of things such as India deciding to stay out of regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) which has China and major South East Asian countries. The blame for this lack of competitiveness must be shared by big players in manufacturing.
What explains our better performance in services though? The answer is primarily twofold. Part of the growth is outsourcing from the advanced countries which first drove the KPO boom and is now pushing the GCC growth. Because the Chinese do not speak English, we have not had to worry about them on this front. To be sure, this should not take away from the entrepreneurship which our early IT leaders showed in capturing the opportunity and capitalising on it. We would be significantly worse-off without the services boom of the last three decades.
Another part of the services success story is formalisation of services which used to exist in the informal economy. Think of education, real estate, even hospitals. A lot of ongoing upward mobility in services is happening on this front. There is no foreign competition here. It will require foreign companies to move to India where they will be constrained by both regulations and lack of local knowledge. Services, after all, require more personal connect with customers than manufacturing. To be sure, what is increasingly happening is foreign investors buying or planning to buy part of these companies to get a piece of the pie. From Haldiram to real estate companies, everything is of interest to foreign investors.
At a slightly lower tier, the growth in services arises from simple demographic expansion. More people mean demand for more houses, more children means demand for more private schools, more marriages mean a brisk banquet hall business etc. You just have to be there at the right time and may be have some seed capital such as land. There is very little technological transformation or learning involved here. Some of these players eventually make it big but the success rate would be miniscule.
But why is nobody trying to push the envelope in manufacturing?
This is where the big bang employment generation will come from. This is what can give us a lead in exports generating massive tailwinds for growth. One can list three reasons. One, beyond a point, pursuit of manufacturing requires competing with the Chinese. Why do that when you can make money trading with them. Two, unlike services, manufacturing requires serious focus and investment in R&D. The government and the private sector have both underinvested here historically except in areas where the world cut us out. ISRO is a good example. And three, manufacturing is still far more susceptible to state regulation and its political weaponization than services. The former is often more driven by the latter than de jure regulatory concerns.
Radical reforms, if they are done – and there is a big if here because really radical reforms may be politically counterproductive — will only take care of the third problem. The competitive and capacity hurdles manifested in the first and second problems will still remain.
Are the first and second hurdles described above the reason why some of India’s biggest business houses which made their initial fortune in manufacturing in the pre-reform period are now increasingly diversifying into services? Does it tell us something about Indian capital which, one can argue, strategically avoided competition both in the per-reform period (by playing the licensing regime) and post-reform period (by moving away from manufacturing which has global competition). Has this resulted in some versions of creative destruction in Indian capitalism?
At the risk of being provocative, has the manufacturing dominance of China – China accounts for more than half of our non-petroleum trade deficit – created incentives for capital in other emerging market economies to tend towards a ‘comprador’ like behaviour which prioritises profits from trade rather than pursuing high productivity and growth? Is it this tendency which has led to ongoing Indian wealth creation being more derived (through trade) than organic which triggers a favourable dialectic of economic dynamism within the economy?
Engaging with these questions is necessary to answer India’s present inability to usher in a sustained high growth phase. Would this not be more interesting than the now cliched wild-goose chase of some elusive reform which people believe will finally catalyse the growth engines of the Indian economy. Lack of reforms does not seem to be hurting the growth of the super-rich after all.
Roshan Kishore, HT’s Data and Political Economy Editor, writes a weekly column on the state of the country’s economy and its political fallout, and vice-versa.
