Swatch Ready To Set Up Shop In India
Swiss Do Not Give India A Miss: Swatch Ready To Set Up Shop In The Country
Swiss watchmaker Swatch is set to launch stores in India, according to a report released recently. The Swiss-based watchmaker is moving to tap a rising market for accessories and time pieces.
According to media reports, Swatch has made a proposal to the commerce ministry for allowing the company to gain 100% control over its business in India. Swatch has annual sales of $10 billion.
With this move, the Swiss watchmaker will be the largest international group to find entry into India's 100% owned single-brand retail segment after IKEA and H&M, both of which are Swedish firms.
Dealers and third-party stories are the medium through which Swatch watches such as Omega, Longines and Tissot will be sold in India. Swatch now stands to create a strong brand identity in India according to experts quoted in media reports. The Indian watch market is set to grow from $898 million to $2.7 billion in the year 2020.
With the NDA government in power, international firms are now looking to establish national presence. But while some want in, others choose to walk away. Carrefour's exit is not surprising given that it changed its strategy to aim for domestic markets rather than non-performing international markets. For any company, the bottom-line is the profits. When the numbers are right, firms will naturally want to get into the Indian consumer market.
With the latest government seeking to ease the investment climate, ease red tape and create a regulatory as well as positive tax climate, efforts are on to attract global players to the Indian market. Economic liberalisation and pro-business can clash with pro-poor concerns. This has happened before and it may occur yet again.
The question is whether a balance can be found. The Modi government also wants to protect small businesses in India from supermarket giant such as Tesco and Wal Mart. Swatch's application comes in the wake of Carrefour's exit in the face of the government's reiterated opposition to foreign investment in multi-brand retail at that time.
Wal-Mart too backed out last year when it learnt of these plans. With a formal proposal by Swatch to set up shop with 100% FDI route before the commerce ministry, the tussle between global businesses and domestic businesses is going to intensify.
The advantage of companies who get access to the 100% FDI route is that they can control everything from pricing to consumer experience. With high stakes on line, some global players are unlikely to back off. The government has to choose what is best for all to the largest extent possible.
