Despite India having been the least impressive of the so-called BRIC (Brazil, Russia, India and China) markets in recent years in terms of duty free and travel retail spending, at today’s TFWA Asia Pacific show, speakers were optimistic that the sub-continent –which houses six nations – would eventually prosper.

 

Moderating a session on this fascinating emerging market, DF&TR veteran John Sutcliffe (pictured right, below) – an expert on Middle Eastern duty fee and now a consultant – remarked: “India is analogous to the Middle East in the early to mid-eighties. At that time, nobody ever dreamt that Dubai Duty Free would be generating almost $2bn a year. There was not much interest in it then.”

 

His perspective put in focus the fact that, while India has been far from over-achieving – not helped by the slide in the value of the rupee, the country’s slowing GDP growth, and off-putting regulatory hurdles – there are factors in its favour.

 

On the negative side, Duncan Lawley (second left), CEO at Delhi Duty Free Services, said: “Bureaucracy in India is beyond belief, while Flemingo’s Director and Board Member, Paul Topping (second left), a very experienced operator in the market, added: “Planning drifts, people don’t deliver on time… so you must have patience.”

 

Even Arghya Chakravarty (left), the CEO of out-of-home media house, Times OOH, described India as “prone to ups and downs” and that operators “need to be confident and stay the course.”

 

 

POSITIVE SPIN

But they were, nevertheless, all optimistic over the long term and trotted out statistics that put a positive spin on the market. A growing population that would overtake China by 2028 with 1.45bn people; 430m consumers aged 15-34; a middle class army of 267m by next year (see main image); the world’s third largest aviation market; luxury travel expected to increase sixfold to 50m by 2020; and so on.

 

Much of this travel will be focused at just two hubs, Mumbai’s Chhatrapati Shivaji International Airport and Delhi’s Indira Gandhi International Airport, which currently process about 50% of all air traffic in India [almost 70m passengers in 2013 between them].

 

To spread the load, five major airports have been modernised in recent years and 200 low-cost gateways are planned in the next 20 according to Lawley, while the doubling of mall space in the past five years has made Indians much more brand aware.

 

However DDFS’s Lawley accepted that the rupee’s decline [since mid-July 2011 to now the currency has fallen by -24.7% against the dollar] has put its pricing under pressure, while counterfeiting and illegal spirits remained another issue that has plagued 10-15% of the market.

 

IT’S ALL ABOUT ARRIVALS

Such factors have helped drive Indian DF&TR shoppers into the arms of Middle Eastern operators such as Dubai Duty Free. Flemingo’s Topping argued that –given that India is largely an arrivals business [with about a 60% share] – these shoppers need to be lured back. That would also help raise the level of non-aeronautical revenue from airports which currently stands at just 30%.

 

India’s current level of DF&TR sales is valued at $300m – compare that to the single operator, Abu Dhabi Duty Free which turned over $248m in 2013. Aviation analyst, CAPA, say that India is set to generate $1.5bn by 2023 (see below), still a modest figure for the world’s third biggest aviation market. However, with DDFS predicted, by joint venture owner Aer Rianta International to produce sales of $140m in 2014, up by +12%, there is hope that other well-developed offers will also eventually produce the right results.