While no foreign firm has so far got into multi-brand retail trading in India, where 51% FDI was allowed a few months ago, the list of single-brand retailers entering the country is expanding rapidly. After the proposals from Ikea, Promod, Zara and Fossil, the department of industrial policy and promotion (DIPP) has received a request for FDI in single-brand retail from Italian leather goods brand Furla. Apart from this, Swedish multinational retail-clothing firm, Hennes & Mauritz (H&M) is expected to submit its proposal next week.
With Ikea?s proposal getting all requisite approvals, the confidence of global players in single-brand retail trading has risen and experts see more and more brands lining up soon for establishing presence in India.
Furla has submitted its proposal to set up shop in India in partnership with Indian company Genesis Luxury Fashion, according to sources. Although 100% FDI is allowed in the sector, the Italian firm will hold only 51% FDI in the joint venture.
The Italian brand is present in 71 countries, with 320 single-brand boutiques, 1,290 points of sales in department stores and specialised stores. Genesis is involved in distribution of luxury fashion labels in India. It is one of India?s largest international luxury conglomerate in fashion retailing with its portfolio including international fashion labels like Bottega Veneta, Canali, Paul Smith, Just Cavalli, Jimmy Choo, Etro, Tumi and Armani.
As of 2011, Furla employed about 925 employees and a multiple of these are employed indirectly at suppliers, transport companies and other service providers. The consolidated turnover of the company stood at 173 million euros as on December 31, 2011, indicating a 15% growth.
Furla?s proposal to DIPP says that its Indian joint venture ? Furla India ? will be engaged in importing, marketing, distribution (including wholesale, retail and through all other channels), sale of or dealing in any manner whatsoever with the existing range of products under the ?Furla? brand in India. It has also said that Furla India will sell its products through various single-brand retail stores and single-brand points of sale located at various department stores.
?The company has filed its proposal for over R6.6 crore of investment initially through Titus & Co law firm and has said it will expand its investment in a phased manner,? an official said.
Sources say that H&M will also approach DIPP in the coming days. The Swedish firm is expected to line up an initial investment of $500 million for its India foray, which the company calls an ?interesting? market.
H&M is the second-largest global clothing retailer behind Spainsh retailer Inditex, the parent firm of Zara. It has footprint in 43 countries and does not want to miss the opportunity to open stores in India.
Retail expert and Technopak Advisors CMD Arvind Singhal told FE that as the number of international brands are increasing in India across formats, it will leverage the potential and competition in the country. ?Keen competition is driving the international brands to adopt the ?Made for India? models, leading to higher acceptance and thus increased share from around 18% in 2011 to 25% over the next five years,? Singhal said.