The world’s top luxury goods makers like Louis Vuitton, Canali, Jimmy Choo, among others, will be the biggest gainers if the government opens up single brand retail to 100% foreign direct investment. Currently, foreign companies can invest only up to 51% FDI in single brand retail firms, forcing them to tie-up and depend on their Indian franchises.
This is a positive signal by the government and brands will now have a far greater appetite to invest in the country, says Tikka Shatrujit Singh, chief representative in Asia for French luxury firm LVMH. “It’s never too late to open up.”
This is expected to provide the push for a number of new brands to come into the country. “Brands that want to come in directly into the country have been waiting,” says Sanjay Kapoor, managing director of Genesis Luxury, which represents luxury brands like Canali, Jimmy Choo and Bottega Veneta in India. Existing luxury brands in the country too want to expand across the country to leverage the large market in the country. The size of the Indian luxury market was estimated at $4.76 billion in 2009 and is expected to triple to $14.7 billion by 2015. As incomes rise across the country and the number of high networth individuals increase, awareness about luxury brands too is on the rise.
Currently, foreign companies can invest only up to 51% FDI in single brand retail and go through local partners. In most cases, their local franchise also sells competing brands from different outlets, where sometimes there is a conflict of interest. Now, they will surely have an option to come on their own.