India should cut import duty on luxury goods: Stefano Canali
Stefano Canali, the third generation heir of Italian luxury clothing and accessories brand Canali, says most Indians buy luxury products from abroad due to lower rates and that the country should draw lessons from China to undo this "huge missed opportunity".
"More than three-fourths of the expenditure on luxury by Indians is outside the country," Canali told ET in an interview during his visit to Delhi last week.
This is because luxury goods cost 20%-25% more in India than they would in London, Singapore or Dubai.
The 40-year-old director general of Canali rues that while China, despite being a communist country, has been lowering import duties on luxury goods to boost domestic consumption, India still imposes high taxes on these products.
"We hope the Indian government decides to change the policy (and lower tax rates on imported luxury goods) as it will have a huge benefit for the Indian economy...(by ensuring) consumption of luxury goods grows in the local market."
Canali says high import duty is one of the three major constraints slowing the growth of the $5.8 billion luxury market in India. The other two are lack of infrastructure and lack of luxury locations.
"If these constraints are taken care of, India can catch up very fast with the west and with China. It has the potential to become the second largest market for us in the Asia Pacific," he says. Canali is already growing fast in the country-its business grew 43% last year compared with the previous year.
It recently converted its franchise with Genesis Luxury in India into a 51:49 joint venture.
It plans to add 15 stores in the country over the next three-four years. "We are convinced that it is a reachable target," says Canali, who was in India for the first board meeting of its first ever joint venture company.
Even though the Indian government has allowed 100% foreign direct investment in single brand retailing, Canali plans to keep its partner. "India is a big and complicated market and we need a knowledgeable partner here," Canali says. He hopes the local partner will help it find quality locations to open stores, especially in smaller cities.
"This is the value that a local partner will add. It will be very difficult for any foreign brand to effectively seek and find proper locations," Canali says. India has only a handful of luxury malls, with a few more under construction.
While growing at 20% a year, the Indian luxury market is adding a large number of customers who have the money but lack knowledge about luxury brands. So Canali is training its staff to handle and educate such consumers.
To deliver a standardised experience across all Canali stores across the world, the company is setting up the Canali retail academy, which will be completed by end of this year. "This academy will be attended by all the sales people working at Canali stores worldwide," says Canali.
Source : economictimes.indiatimes.com
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