Local buy clause deters single brand retail gush | SupportBiz

Policy Notes

Local buy clause deters single brand retail gush

Mandatory 30% local sourcing clause

In January, India allowed foreign single brand retail firms to set up shop but made it mandatory for them to source a third of their requirements from local small and medium enterprises.

The sourcing clause has upset foreign brands looking to set up shop in India. Swiss and Japanese watch makers included, for whom India is a very big market. A CII- A.T.Kearney report pegs the Indian luxury market at $5.8bn, expected to grow to $30bn by 2015 according to last year's Mint Luxury Conference. The sourcing clause will affect the “Swiss made” brand, argue the former. Access to fine craftmanship worries the latter, reports the Hindu Business Line (HBL).  

The India head for Swiss Army Watches, Victorinox, Debraj Sengupta says no Swiss watch making brand is showing interest in single brand retail, here.  Brand value, he says, is dependant on the products being Swiss-made; it cannot be made in India.

“High-end watches need as many as 450 different parts and even within Seiko there are only nine master craftsmen who can produce such watches. It is difficult to find technicians who are trained extensively in such fine skills,” says Niladri Majumder, Head of Sales and Marketing at Sieko India.

But the CEO of Ethos Swiss Watch Studios, Raja Sekhar was quoted as saying that the sourcing clause will not kill any brand. The bigger brands may not opt to increase their shareholding above 50% in India and this will help maintain the status quo.