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The government’s announcement on Tuesday that it is “seriously considering” relaxation of the cap on FDI in single brand retail met with an encouraging response from global luxury brands, including Salvatore Ferragamo and Jimmy Choo, which hope to increase their India investments.
“If we have the possibility to control 100 per cent of the company, of course, the return on investment is more favourable. So we could be keen to invest more in India,” Salvatore Ferragamo CEO Mr Michele Norsa told PTI.
He was reacting to Commerce and Industry Minister Mr Anand Sharma’s statement that the government is “seriously considering” an increase in the FDI limit in single brand retail, although the quantum was not specified.
Expressing similar views, UK luxury brand Jimmy Choo’s CEO, Mr Joshua Schulman, said: “We are very enthusiastic about India and will increase our investments here as soon as the environment is right to do so.”
He, however, said that even if India were to allow 100 per cent FDI, the brand will not operate on its own here.
“... It is not the right time considering our brand cycle here. We are happy with our partnership with Genesis and will shortly open our fifth store in India,” Mr Schulman said.
At present, India allows only 51 per cent FDI in single brand retail, none in multi-brand and 100 per cent in the cash-and-carry trade.
Fondazione Altagamma, a body of luxury brands of Italy, however, said increasing the FDI limit is not enough to attract overseas investors in India retail sector.
“Right now, the environment is not conducive. The government should not only relax FDI limits, but also bring down customs duty and countervailing duty on luxury goods. Only then a lot of European and Italian brands will enter India in a big way,” Fondazione Altagamma Executive Director Mr Armando Branchini said.
He said India is lagging behind China in a big way when it comes to the presence of Italian brands. “Around 40 Italian brands have 430 stores in China, but in India, only 15 brands are present with just 30 stores,” Mr Branchini said.
Sharing similar views, Indian designer wear retailer Kimaya Fashions Chairman Mr Pradeep Hirani said while further opening up FDI in single brand retail will open the floodgates for international brands, for real growth of the sector, even customs duties will have to be reduced on luxury goods.
“World-over, the customs duty varies in the range of 15-20 per cent, but in India, it is between 35 and 40 per cent. That makes brands very expensive to customers here,” he said.
Commenting on the government’s intention, he said: “We do not know when will it happen. At the moment, nothing is moving, as the government is in a state of curfew right now.”
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