India pledges effort to open gates to luxury goods
PARIS, Oct 1 (Reuters) - India pledged to seriously consider a legal reform that would help luxury goods companies gain a stronger foothold in one of their biggest untapped markets to date, potentially worth $15 billion.
During a visit to Paris on Wednesday, India's trade minister Kamal Nath said he would think about allowing foreign retailers to own 100 percent of their companies in India, up from 51 percent today.
"We are considering it, seriously," Nath told Reuters in an interview on the fringes of a conference organised by the Comite Colbert, the French luxury trade group whose 70 members' combined sales reach 22 billion euros ($31.12 billion) annually.
India has been the laggard of emerging luxury markets due to the absence of retail space, excessive red tape, high duties, poor infrastructure and the capping of foreign ownership to 51 percent since 2006.
Due to political opposition, the Indian government has been reluctant to fully open up the country's retail sector.
India only has three major malls, in Bangalore, New Delhi and Mumbai - forcing luxury groups to use top hotels.
India's trade minister on Wednesday was pressed by several French luxury groups including LVMH (LVMH.PA), Hermes (HRMS.PA), Remy Martin (RCOP.PA) and Chanel to allow them greater access.
French luxury leather goods group Louis Vuitton entered the Indian market only in 2003 and it still has only 4 outlets there, compared to 25 in China.
"We would like to have the right to own 100 percent of our retail company rather than 51 percent today that is our request and we will continue to talk to the Indian authorities," Louis Vuitton Chief Executive Yves Carcelle told the conference.
Carcelle said Louis Vuitton was also one of several luxury goods groups that found high duties a barrier to establishing themselves in India.
Tariffs on French luxury goods can reach 500 percent.
"India has an infant and infinite market," Nath told the conference referring to luxury goods, adding the country was keen to promote competition and fight counterfeiting.
According to a report by the Federation of Indian Chambers of Commerce and Industry, the high net worth individual population in India stood at 123,000 in 2007, up 22.7 percent from 2006, making India the country with the fastest growing population of wealthy individuals in the world.
"For the moment India is a very small market but it is a market that has a very strong potential," Elisabeth Ponsolle des Portes told Reuters.
Indian jeweller and manufacturer Gitanjali (GTGM.BO) estimated some 1.6 million households in India earned $100,000 a year and the luxury market could reach $15 billion, from $500 milion today. Continued...
