Why Rich Indians Still Don’t Buy Rolex in India?

Why the Trade Deal Hasn’t Made Luxury Watches Cheaper

The video explains why India’s trade deal with Switzerland has not yet made luxury watches cheaper in practice. It also shows how exchange-rate movements can outweigh tariff reductions for businesses that import products.

Ethos and the opportunity to bring sales into India

Ethos is described as India’s largest luxury-watch retailer, selling brands such as Rolex, Omega, Cartier, and Patek Philippe.

Many Indian buyers have traditionally purchased watches abroad, where they could avoid India’s import duties. As a result, Indian demand—and spending—often went to overseas retailers rather than Indian businesses.

The India–Switzerland trade agreement, TEPA, was expected to encourage more purchases in India by gradually reducing import duties. Buying locally could also give customers a proper bill, a local warranty, and greater confidence in a watch’s authenticity.

The duty reduction did not begin immediately: the deal was signed in March 2024 and took effect in October 2025. The roughly 22% customs duty is being reduced gradually over seven years, rather than removed at once.

Why the expected price relief was offset

The video illustrates the cost impact with a watch priced at ₹1 lakh in Geneva. Customs duty alone could bring its cost to about ₹1.22 lakh in India, while logistics and GST could push the final price above ₹1.5 lakh.

At the same time, the Swiss franc rose from roughly ₹90 to ₹117, increasing its rupee cost by about 30%. The video’s central point is that this currency move could more than offset the early, incremental tariff relief.

As a result, the anticipated reduction in Indian prices—and the associated boost to domestic retail—had not materialized as people expected.

Business impact on Ethos

Ethos buys watches in Swiss francs but sells them in rupees, creating foreign-exchange exposure. Currency movements can raise the rupee cost of inventory while watches are held in the company’s warehouses, potentially reducing gross margins when that inventory is sold.

The video reports that Ethos’s FY26 sales grew 28%, while profit remained almost unchanged from the prior year. It attributes the pressure to currency movements that cost the company crores in gross margin, though it does not give a precise margin decline.

The example shows that strong demand and revenue growth do not necessarily translate into profit growth when input costs rise faster than a retailer can adjust.

Business lessons

• Evaluate the full landed cost, not just tariffs. Include exchange rates, customs duties, logistics, and GST when estimating product economics.
• Map currency exposure across the operating cycle. Identify the currency used to buy inventory, the currency used to sell it, and how long inventory remains exposed before sale.
• Separate demand growth from profitable growth. Track revenue alongside gross margin and profit; sales growth alone can conceal deteriorating unit economics.
• Assess policy changes alongside market variables. Trade agreements may improve economics over time, but exchange rates and other input costs can overpower the near-term benefit.
• Apply the analysis across sectors. Businesses importing oil, phones, machinery, or medicines may also face a mismatch between foreign-currency costs and local-currency revenue.

Another example: IndiGo

IndiGo illustrates currency exposure in another industry. Much of its fuel expense is linked to oil priced in US dollars, while its earnings are largely in rupees. A weaker rupee can therefore increase costs and affect profitability.

More broadly, when analyzing a company, examine which currencies drive its costs and revenues—not just its sales, policy environment, or headline growth.

Presenter/source: Jayant Mundhra, on Groww Edge.