During a visit to Paris on Wednesday, the Indian trade minister, Kamal Nath, said he would think about allowing foreign retailers to own 100 percent of their companies in India, up from 51 percent today.
"We are considering it, seriously," Nath said in an interview on the fringes of a conference organized by the Comité Colbert, the French luxury trade group whose 70 members' combined sales reach €22 billion, or $31.12 billion, annually.
India has been the laggard of emerging luxury markets because of lack of retail space, excessive red tape, high duties, poor infrastructure and the capping of foreign ownership at 51 percent since 2006.
Given the political opposition, the Indian government has been reluctant to open the country's retail sector more.
Nath was pressed by several French luxury groups Wednesday, including LVMH Moët Hennessy Louis Vuitton, Hermès, Remy Martin and Chanel, to allow greater access.
Louis Vuitton, for example, entered the Indian market in 2003 and still has only four outlets there, compared to 25 in China. "We would like to have the right to own 100 percent of our retail company rather than 51 percent today - that is our request and we will continue to talk to the Indian authorities," Yves Carcelle, Louis Vuitton's chief executive, told the conference.
Carcelle said Louis Vuitton was also one of several luxury goods groups that found high duties a barrier to establishing themselves in India.
Tariffs on French luxury goods can reach 500 percent.
"India has an infant and infinite market," Nath told the conference, referring to luxury goods. He added that the country was eager to promote competition and fight counterfeiting.
According to a report by the Federation of Indian Chambers of Commerce and Industry, the population of high-net-worth individuals in India stood at 123,000 in 2007, up 22.7 percent from 2006, making India the country with the fastest-growing population of the wealthy in the world.
"For the moment, India is a very small market, but it is a market that has a very strong potential," Elisabeth Ponsolle des Portes, chief executive of the Comité Colbert, said.
The Indian jeweler and manufacturer Gitanjali estimated that some 1.6 million households in India earned $100,000 a year and the luxury market could reach $15 billion, from $500 milion today.
"India is a very new market for luxury," said Mehul Choksi, managing director of Gitanjali.
