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Government to decide on foreign retail issues
Dipayan Mazumdar | 28 Mar 2008

March 28, 2008, New Delhi: The Mint Hindustan Times Luxury Conference 2008 opened today attracting a galaxy of the world’s top luxury brands.


 

March 28, 2008, New Delhi: The Mint Hindustan Times Luxury Conference 2008 opened today attracting a galaxy of the world’s top luxury brands. Mr. Kamal Nath, Honorable Minister of Commerce and Industry, informed the delegates: “We are waiting for the report from the Indian Council of Research of International Economic Relations (ICRIER), which is expected in the next 15 days. After examining the recommendations of the report, the government will decide on the issues of direct foreign investment beyond 51 per cent.” The Government last year had commissioned a study by ICRIER , a New Delhi-based think-tank to examine the impact of large foreign retail giants on neighbourhood mom-and-pop stores in India.

 

Mr. Nath’s comment was received with great enthusiasm by the delegates to this 3rd Mint Hindustan Times Luxury Conference. It appears that there is a possibility of further opening up the gates for foreign investment in the politically contentious retail sector as also a cut in the import duties of premium luxury goods.

 

“We have to keep in mind that 97 per cent of India’s retail trade is in the unorganized market. We want to protect kirana stores, but need to create jobs opportunities as well,” Mr. Nath said.

 

Mr Nath went on to add , “The government could reduce import taxes of high-end luxury goods. We do have high tariffs so we are looking at rationalizing these. We also have to differentiate between high-end and low-end luxury goods.”

 

After the inauguration session, the conference started with a session titled “Opportunities and Challenges in India.”

 

In the first session “Is India Different: The Challenges for Luxury Brands,” Mr. H. E. Jerome Bonnafont, Ambassador of France for India said, “France has a 80 billion euros luxury goods market of which 80 per cent is exported.” He added that though infrastructure in India is yet to catch up with developed countries the luxury goods companies should establish themselves in this market now. It will be much more difficult later. The numbers of the affluent and users of luxury brands is increasing rapidly. Mr. Andrea Illy pointed out that of the international luxury market, India consumes only about 0.1 – 0.2 per cent at present.

 

In the next round of discussion on the topic “The Mystique of Luxury Brands”, Andrea Perrone, CEO of Brioni; Enrico Marinelli, CEO of FRETTE; and Paolo Canali, Sales and Marketing Director of Canali took part, which was chaired by renowned Indian fashion designer Ravi Bajaj. All the panelists agreed that “Luxury can be defined as quality.”

 

Mr. Perrone announced the opening of the second Brioni store in India in Delhi on March 31st, 2008.

 

Talking about what the industry needs from government, Armando Branchini, Managing Director, Altagamma said that India was not a fair market, as it is over regulated. China has 20 per cent capital duty, while the Indian duty structure on luxury goods is between 45 – 65 percent. He suggested that taxes should be imposed on profits only and the rest left to market economics. He added that although India has a tradition of designing in fabrics or jewellery, it lacks the ability to design contemporary distinctive and appealing designs for young people. The government could invest in high level training in these areas. Altagamma would be glad to support the government’s effort. 

 

Mr. Sanjay Kapoor, Managing Director, Genesis Colors was quick to point out that China does not protect Intellectual Property Rights as India does.

 

Mr. G. K. Pillai, Secretary, Department of Commerce vetted Mr. Kapoor’s sentiments and said that China is a rogue state that does not promote right trade practices. India’s strength lies in its high domestic demands rather than exports. Mr. Pillai went on to add that the luxury goods industry has to demonstrate to the government as well as consumers the value they are bringing in whether it is in terms of better designs, better quality or better manufacturing practices. The government is willing to listen to the issues raised by them at all times. Projects 80 worth billion in infrastructure have been approved. To speed up processes, 95 per cent of goods coming into the country will not be physically checked.

 

Discussing the problem of fakes and the laws required to counter them, Mr. Pravin Anand, Managing Partner, Anand & Anand pointed out that India is perhaps the only country which allows its police to break down locks and enter premises without a warrant where counterfeiting activities are suspected. Conviction rates in IPR cases however are at a dismal low of 2 per cent.

 

Alain Coblence, one of the top global attorneys in IPR said that the counterfeiting trade is estimated at $ 700 billion. Fifty per cent of this is of luxury items like perfumes because of new technology like the Internet. What takes designers weeks to produce can be copied from the Internet, fed into robots and placed in the market in a matter of days. The world is waking up to this menace and the Design Law of India 2000 is a step in the right direction.

 

The first day session ended with a discussion on India’s luxury market.