Luxury brands LVMH, Chanel to dress up India

New Delhi, May 17 | Updated: May 18 2006, 05:30am hrs
LVMH of France, the worlds largest luxury goods retailer, Lladro Commercial of Spain, a leading retailer in porcelain figures and Chanel SA, the French owner of high-end perfumes and accessories have sought the government nod to set up joint ventures in India in retail trade.

An approval by the Foreign Investment Promotion Board (FIPB) for these proposals would mark the beginning of an era of foreign equity participation in domestic retail sector. The government allowed up to 51% foreign direct investment (FDI) in single-brand retail ventures in January, subject to prior FIPB nod.

LVMH, which owns brands such as Louis Vuitton, Tag Heuer, Christian Dior etc, already has a couple of outlets in Mumbai and Delhi managed by a local partner. The fashion house has now sought FIPB approval to float a new JV with 51% foreign equity, official sources said. The identity of the local partner could not be immediately ascertained. LVMH entered the Indian market in 2003, by offering training and management inputs to the Indian franchisee investor.

Spanish major Lladros plea is for acquiring 20% stake in a new retail venture to be set up in India. The company, which made an entry into India four years back, has a distribution arrangement with local partner, SPA Agencies. The duo has outlets in Delhi, Mumbai, Bangalore, Chennai and Kolkata.

Wide Open

LVMH, which owns brands such as Louis Vuitton has sought approval to float a new JV with 51% foreign equity.
Spanish major Lladros plea is for acquiring 20% stake in a new retail venture to be set up in India.
Govt may allow retailing of multiple products by FDI companies provided they have the same brand name

Apart from these retail biggies, Moja Shoes Ltd, Sonapet, has applied to FIPB seeking permission to float a new company in which it proposes to infuse 20% FDI. Moja has a manufacture tie-up with global footwear brands Nike and Reebok.

According to official sources, the government is likely to interpret the term single-brand retail in a liberal manner. Multiple products are likely to be allowed to be sold under a single brand name.

Chanel India, a perfumes-to-garment accessories brand, which opened its boutique in March 2005 in Delhi, has already announced plans to open a dozen more outlets in other major cities.

These retail majors perceive substantial business opportunity in India, thanks to the growing spending prowess of Indian middle class.

On Wednesday, the government came under attack from its Left allies and the opposition for its reported plan to further liberalise the FDI regime. Commerce and industry minister Kamal Nath has now agreed to a discussion on the issue scheduled for next week.