Italian fashion brand, Naracamacie, is keen to enter the Indian retail market, and has sought government permission for the same. In an application made through a potential franchisee, Sagar Shwekramani of the UAE, Naracamacie has told the Foreign Investment Promotion Board (FIPB), the key wing in the Finance Ministry for vetting FDI proposals, of its interest in being a player in the India market. Shwekramani is a name associated with the fashion industry.
The Indian government permits up to 51 per cent FDI in single-brand retailing. There are indications that the rules may be relaxed further in the single-brand space, once foreign play is allowed in multi-brand retailing. Currently, no foreign investment is permitted in multi-brand retailing, but a change in regime is expected in the near future. There’s no restriction on FDI in cash and carry or wholesale trading in the country.
Currently, there are an estimated 200 foreign brands in India . The total turnover in single-brand retailing, including Indian and foreign labels, is pegged at around $3 billion to $4 billion in the country. And, foreign direct investment (FDI) inflows between April 2000 and January 2011, in single-brand retail trading, stood at $ 128.34 million, according to the Department of Industrial Policy and Promotion (DIPP). The foreign brands in the process of expansion in India include Paul & Shark, Zegna, Diesel, among others.
Pinaki Ranjan Mishra, Partner & National Leader, Retail & Consumer Product Practice, Ernst & Young, pointed out that for aggressive growth in the single brand space, further relaxation of the FDI regime will be an advantage. At present, there are two routes that single-brand retail players can enter India through—with Indian partners or through the franchisee route. According to Mishra, as per the present norm, the foreign brand will either have to depend on the investment plans and strategies of the Indian partner or the franchisee.
Anand Ramanathan, manager, KPMG Advisory Services, said that the biggest challenge in the single brand retail space is to strike the right balance between the quality of products and service, store experience and franchisee objectives. As in most cases in single brand retailing, a franchisee controls the operations, the brand value may stand diluted, Ramanathan argued. Also, due to the FDI restriction, single brand is often seen as an opportunistic business, rather than having a long-term view
Naracamacie is a fashion brand, focused on shirt collection, both for men and women. Recently, they ventured into areas like knits and dresses too. A questionnaire sent to the company about its India plans remained unanswered.
It’s a private company, which was started by two designers in 1984 as franchisee stores of shirts and was funded by venture capitalists, according to information available on its website. Naracamicie stores operate in the US, Europe, Russia, Japan, Korea, Vietnam, Taiwan, Syria, Saudi Arabia, Nigeria and Australia, among other places. While it has 300 points of distribution in Italy, the remaining 150 are spread across other countries. Apart from boutique shops, the brand also sells through departmental stores.
Total retail sales in India is expected to grow from $ 395.96 billion in 2011 to $ 785.12 billion by 2015, according to the Business Monitor International (BMI) India Retail Report for the second-quarter of 2011.
Source : Business Standard