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The Art Market

Why did India’s art boom go bust?

About the author

Georgina Adam has spent more than 25 years writing about the art market and the arts in general. She is editor at large at the Art Newspaper. She writes a weekly column for the Financial Times and lectures at Sotheby's and Christie's institutes in London.

A folk artist at Calcutta's Craft Fair. (EPA/Piyal Adhikary/Corbis)

(EPA/Piyal Adhikary/Corbis)

Fortunes are being made on the subcontinent, but in contrast to China, India’s newly rich aren’t investing in art. Georgina Adam explains.

A massive head of Buddha, its eyes, long-lobed ears and mouth encrusted with gold, stands guard in a deep pool outside the home of New Delhi art collectors Shalini and Sanjay Passi. The sculpture, by the ‘Damien Hirst of India,’ Subodh Gupta, faces the Passis' curved, glass-walled house in the exclusive Golf Links district of the city.

On a chilly evening in January, the house was the setting for a dinner given in honour of Christie’s UK chairman Viscount Linley, who had flown in for the fifth edition of the India Art Fair. Guests wandered around rooms sumptuously furnished with deep sofas, crystal chandeliers, sculpture and paintings by Gupta or MF Husain. Every room was equipped with a screen playing art videos, and even the bathrooms were thrown open – one entirely lined with scarlet and green floral mosaics. A-list socialite Shalini Passi, graceful in a floating pale layered dress, long ropes of pearls dangling from each wrist and a choker of diamonds clasped around her throat, moved solicitously among the guests.

She and her husband are typical of the wealthy Indians that art dealers and auctioneers are busily wooing, and Christie’s and Sotheby’s – which had also dispatched its aristocratic deputy chairman Lord Poltimore to India for the fair – see the vast subcontinent as the next huge market for art, alongside China. The two countries’ populations are equally massive, enormous fortunes are being made and the newly rich are avid to show off the symbols of their success.

In December 2013 Christie's held its first Indian auction. (Divyakant Solanki/Corbis)

(EPA/Divyakant Solanki/Corbis)

But that is where the comparisons end, and the reality is that the art market is profoundly different in the two countries. India’s market is officially worth $40m a year. Even if it is double that in reality, because of unrecorded transactions, it is still just a fleabite compared to China’s sales of $3.51 billion of art at auction in 2013.

So why is there such a disparity between the two countries? And what happened to the brief ‘India art boom’ in 2006-2007, when a Gupta could sell for over $1 m and stock exchange traders stopped working to follow online art auctions?

The reasons range from the lack of government support and India’s poor cultural infrastructure to the bursting of the art bubble in 2008.

“The government has zero interest in culture, it is disheartening,” admits the leading collector Kiran Nadar, one of the very few Indians to have founded a private museum in the country. “I even have to pay duty on anything I import for the museum, which is a non-profit! And we are not attracting high numbers of visitors to the museum – we get 3,000 a month, half what we hoped for.”

Visitors view works by MF Husain at New Delhi's Indian Art Summit. (EPA/Anindito/Corbis)

(EPA/Anindito/Corbis)

Compare this with China, where the government gives, rent free, land for museums, and is determinedly promoting art and culture as ‘soft power’. It has publicly announced that culture is a ‘pillar industry’ and aims for it to represent 5% of the country’s GDP. The country now has over 3,500 museums and 535 private ones, in a country that had virtually no museums in the mid 20th Century.

In contrast, there are just a handful of private initiatives in India, such as the Nadar museum or the Devi Art Foundation, started by the mother-and-son collecting team Lekha and Anupam Poddar. The few state institutions are very poorly funded. “The government is bogged down in economic and social issues,” explains India Art Fair director Neha Kirpal.

India’s notoriously cumbersome bureaucracy doesn’t help either: “You need a visa to go to the bathroom here!” exclaims dealer Peter Nagy of Mumbai’s Nature Morte, exhibiting at the fair. Tax on imported art is 15%, which foreign exhibitors have to pay on works they bring in for sale. While this is reimbursed if they re-export the unsold items, this can take months – a killer for the smaller galleries. China also levies a huge tax on imports – 24% – but a new free-trade zone in Shanghai may facilitate trade, and a number of art galleries are looking at setting up within its perimeter.

As for collectors in India, they are still, says Shireen Gandhy of Chemould Prescott Road, “Quite domestically focused, and conventional – and they can be quite fickle.” Over 60% of her sales go to buyers abroad. The Kolkata gallery Experimenter says its overseas trade is even higher at 70%. “There are only six or seven collectors here for our programme, our challenge is to grow that base,” says Experimenter co-founder Prateek Raja.

This is what the India Art Fair, and the initiatives by Sotheby’s and Christie’s – which held its first live sale in Mumbai in December – are aiming to do. But all admit that the road is likely to be long. “This isn’t a developed market,” says Kirpal. “Contemporary culture is still young in this country.” And the bursting of the Indian art bubble in 2008 did not help. “Prices dropped by up to 70%, almost an entire generation of artists was lost to the commercial world,” says Kishore Singh of the Delhi Art Gallery. This inevitably shook confidence, and buyers have returned to the safer progressive and modern artists – Husain, Gaitonde, Souza, Raza and so on.

A statue by Akash Choyal at the 2013 India Art Fair. (EPA/Anindito Mukherjee/Corbis)

(EPA/Anindito Mukherjee/Corbis)

“In China, more than 100 people can buy works of art priced over $1m, and in the country there is a long tradition of paying enormous sums for classical art,” says Philip Dodd, whose agency Made in China organises cross-cultural events. He brought 17 Chinese visitors to the Delhi fair, among them artist Zhou Tiehai and the collector Budi Tek, who is opening a new museum in Shanghai, in a disused airplane hangar, in May. Tek buys on a grand scale, from Maurizio Cattelan, Adel Abdessemed or Fred Sandback to Chinese names such as Liu Wei and Zhang Xiaogang.

Dodd says that he is already preparing to take Indian collectors back to China for a matching visit. But whether they are ready to buy on the Tek scale is another matter. “Most collectors here are astonished if you say a Neo Rauch sold for $1m at Zwirner,” says one dealer: “They say, ‘who is Neo Rauch? And who is Zwirner?’”

Nevertheless, the fair’s co-owner Sandy Angus remains optimistic. “Compared to China, this market is more exciting,” he says. “There are as many potential collectors here.” But, he admits, “It will take time to materialise.”

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