"Crazy," muttered one man, amid a swirl of excited chatter and scattered applause. He—and many among the largely Indian crowd—realized that only a decade ago, similarly substantive work by Gaitonde and other leading Indian modern artists could be had for just a few thousand dollars.

VASUDEO GAITONDE'S untitled 1975 painting sold for $1.47 million at a Christie’s auction in March. It was the second modern Indian painting to sell for more than $1 million that week. (Photograph courtesy Christie's.)

The first Gaitonde to crack $1 million, this untitled work painted in 1975 is one of only half a dozen modern Indian paintings ever to fetch seven figures—all of them sold since last September. The incredulous crowd at Christie’s was also well aware that the Gaitonde was the third $1 million-plus modern Indian painting sold that week. At Sotheby’s the previous day, an abstract painting by Syed Haider Raza from 1972 brought $1.47 million, while Tyeb Mehta’s Falling Figure with Bird fetched $1.25 million.

Top paintings by the most-established Indian artists are drawing the greatest attention, but the boom is rippling across the entire market. Many lots at Christie’s and Sotheby’s fetched more than double their low estimates, despite the fact that two significant sales were held earlier that same month—one in New Delhi at Osian’s auction house and one by online house Saffronart, which has offices in Mumbai and New York.

"The market is broadening and deepening," says New York-based Indian hedge fund manager Rajiv Chaudhri. A native of New Delhi who moved to the United States in 1981, Chaudhri began building a collection a dozen years ago. Chaudhri and his wife, Payal, now own dozens of works by important artists, including Raza and Maqbool Fida Husain. "A tremendous amount of art came into the market and was absorbed, with a substantial appreciation in price," he says.

Modern art first flowered on the eve of India’s independence in 1947. Today’s spectacular rise parallels the country’s evolution into a 21st-century economic powerhouse. A newly minted class of wealthy collectors is emerging in India, willing to pay the $225,000 or more that top works by Husain and other artists known as Progressives now command. Until recently, 90 to 95 percent of Sotheby’s buyers in this market were Indians living in the United States or United Kingdom, but for September’s sale, 45 percent of buyers were Indians based in India or the Middle East.

"Nonresident Indians are still an important component of our buyer base," says Anu Ghosh-Mazumdar, senior cataloger in the Indian and Southeast Asian department at Sotheby’s. "But interest from India has been very strong and instrumental in pushing prices up."

Growth potential remains robust, with interest burgeoning in this nation of more than 1 billion people, with an expat population of 25 million. Non-Indian Western collectors are also emerging as a small but growing force. As their audience increases, however, Progressives are nearing the end of their productive years. Gaitonde died in 2001. Mehta and Raza are now in their 80s, and Husain, arguably India’s leading artist, is 90. Husain has been famously prolific—he is known to produce a painting on demand at a party in 30 minutes—but he is the exception.

PROGRESSIVE ARTIST Maqbool Fida Husain captured the Thomas Keehn family in 1959. (Photograph courtesy Thomas Keehn.)

"There’s only a fixed pool," says Prajit Dutta, a Columbia University economics professor and partner at Gallery ArtsIndia. Dutta founded Gallery ArtsIndia online in 2000, expanding soon after to galleries in New York and Palo Alto, Calif. According to his research, prices in the Indian art market rose 300 percent between 2000 and 2005.

Passages to India
The Progressives sought to articulate their distinct visions of modern art, so it is only natural that many of today’s collectors are motivated by an interest in Indian heritage. Some are also general fans of Indian art, while others simply love modern art. Despite the recent surge in prices, many fans believe the market has not peaked, primarily because Indian art is still a relative bargain compared with Western modern art (as are works from other emerging markets such as China). More importantly, significant collections of Indian art remain in private hands rather than institutions, meaning that the works may become available to collectors.

"Someone coming in today or tomorrow who says, ‘I want to build a great collection [of modern and contemporary Indian art],’ may have to spend," says Chaudhri. "In the case of Western art, for love or money, you cannot get the Met to sell its Impressionists."

Chaudhri has had a passion for art since he was a child poring over pictures of great Western works, such as the Impressionist paintings he would later see in New York. His heritage, and the fact that it was possible to build a world-class collection for a relatively low sum, inspired him to focus on Indian art of all ages and regions. Drawing on his experience as a financial executive, he is highly selective. He has amassed only some 250 contemporary and modern Indian works in 12 years because he seeks art from the top 5 to 10 percent of a given artists’ oeuvre. Chaudhri focuses on aesthetics rather than investment value, and maintains 60 to 70 pieces in his office to enjoy during his work week.

Many observers trace the origin of the current run-up in Indian modern art to a 1995 sale of the holdings of the late Chester and Davida Herwitz. When more Herwitz works reached the auction block in December 2000, Chaudhri had a keen interest in five lots. He dropped out of bidding on the first four when prices exceeded double their estimates, but when the fifth lot came up, he decided he had to have it. To obtain the painting, one of Mehta’s falling figures, Chaudhri spent $72,625. At the time, it was the second-highest price ever paid for a work of contemporary Indian art at auction and a record for the artist.

"I felt I’d done something really crazy or stupid, but I rationalized it that I missed out on the others," Chaudhri says. The painting is now worth more than $1 million. "The reality and the right perspective is that the best art always sells at a price that feels crazy at the moment."

SYED HAIDER Raza’s Bindu-Naad shows naad, or sound, intensifying with repetition. The black bindu at the center of the work is the source of the sound. Raza believes that just as the repeated syllables of mantras induce a state of meditation, so do repeated images. (Photograph courtesy Umesh and Sunanda Gau.)

Like the Chaudhris, Umesh Gaur and his wife, Sunanda, enjoy owning art that reflects their Indian heritage. The Gaurs’ inspiration to collect Indian modern art, however, stems from their broad love of modern art. Novices who are interested in building a collection of Indian art may find a helpful example in the trajectory of the Gaurs’ collection. The couple began buying Progressives 15 years ago, then focused on the next generation of artists, including Ganesh Pyne and Nalini Malani. In the past three years, the Gaurs have shifted their attention to younger, contemporary artists such as Atul Dodiya and Subodh Gupta.

"We happen to be very fortunate that we are ahead of the curve," says Gaur, who runs his own financial firm in New Jersey. "The Progressives have gotten so expensive—if you were to go to younger artists, for the same capital you can enjoy three paintings. You can have more fun."

The frenzy for Progressives, however, has also lifted prices for work by second-generation and contemporary artists. An untitled Gupta oil painting from 2005 fetched $84,000 in the March Christie’s sale, more than triple the low estimate; an installation featuring stainless steel utensils sold for $144,000, more than seven times the low estimate.

Some insiders worry that the boom portends a serious correction. Fakes have long been a concern, but now gallery owner Deepak Talwar fears that some artists are producing too much work of lesser quality. Meanwhile, some new buyers are flipping art rather than collecting it. "Collectors buy work they like, and if it appreciates, that’s a bonus. That should not be the primary intention, or then you become a trader," he says, proudly noting that none of the work he has sold in the last five years has been resold. "The market has changed so rapidly, and you know when that happens a lot of people are looking to make quick money."

Talwar is particularly skeptical of Indian art mutual funds, which have sprung up in both the U.S. and India. He notes that to become a true collector, art fans must spend time at galleries, rather than simply looking at auction catalogs. It is also important to have an understanding of the broad market for contemporary art; dilettantes risk collecting in a vacuum.

Mumbai on the Hudson
The East Coast is the center of Indian modern art in the United States, reflecting the high concentration of expatriate Indians living there. New York City has several well-regarded galleries: Talwar, ArtsIndia and Bose Pacia, among others. Bose Pacia sparked one of Chaudhri’s early purchases by sending him a flyer for its 1994 debut. Sotheby’s and Christie’s have thorough records of previous auctions on their websites; experts also recommend saffronart.com as an invaluable resource. A Guide to 101 Modern & Contemporary Indian Artists, a book by Amrita Jhaveri, provides a solid introduction and overview of major artists.

Despite the boom in Indian art, powerful modern art museums in New York, including the Museum of Modern Art and the Guggenheim, have yet to host a large exhibition. Gaur, who recently began loaning some of his collection for museum shows, hopes to change this. He is helping a firm called Art Services International organize a traveling exhibition slated for 2008. Their goal is to bring together the Progressives’ most significant works, including Husain’s Between the Spider and the Lamb, and Mehta’s Celebration. "There’s so much interest," Gaur says. "The timing is right."

Those well-versed in the history of Indian modern art recall that Husain and Gaitonde began garnering wide acclaim with a group show in New Delhi in 1956, followed by one in New York two years later. These exhibitions resulted from the efforts of Thomas Keehn, who met and befriended young artists after moving to India in 1953 to work for a nonprofit organization established by Nelson Rockefeller. Rockefeller, who was president of MoMA in the 1940s and 1950s, charged Keehn with discovering and supporting promising new Indian artists.

Although Husain lived in Mumbai, hundreds of miles from New Delhi, he and Keehn became close friends. Husain often painted at Keehn’s house, even producing a large oil portrait of Keehn, his wife and five of their six children in 1959. Keehn donated much of his collection to the nonprofit World Education Fund as a memorial to his wife, Martha McKee Keehn, who died of cancer in 1996.

The favorites he still owns have become part of the canvas of his personal history. The last time Husain visited Keehn, the artist asked for a 1956 work back, offering 10 newer ones in exchange. Keehn has also been contacted by auction houses about selling, but has resisted, giving the same answer to anyone who seeks to separate him from the art he has enjoyed for so many years: "I said, ‘I like that painting. [It’s] part of our family.’"

Catherine Curan is a senior correspondent for Worth.