AIFHI Whitepaper India Time Wear Industry - WIP - Oct 8 2010

ALL INDIA FEDERATION OF HORLOGICAL INDUSTRIES India Time wear Industry - 2010
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Contents
1. EXECUTIVE SUMMARY………………..………………………………………………………….4
2. BACKGROUND…………………………………..……………………………………………………5
3. RESEARCH METHODOLOGY..………………………………………………………………….6
a. Secondary Research
b. Primary Research
4. OVERVIEW OF INDIAN TIMEWEAR INDUSTRY………………………………………8

a. Sector Scan
i. Market size, structure & segmentation
ii. Current supply chain overview
iii. Recent key developments and trends in the sector – India’s manufacturing capability,
job opportunity etc
iv. Evolving retail formats
v. Key players & their future plans
b. Swot analysis of the industry
c. Consumer trends and their impact on the industry
d. Key drivers of growth
e. Regulatory environment
i. Taxation policies, incentives & implementation
ii. Import duty structure & its implications
5. KEY CHALLENGES & BOTTLENECKS……………………………………………………43

a. Taxation policies
b. Duty structures
c. Counterfeiting
d. Watches under Weights & Measures Act
e. Customer Preferences for buying luxury product
f. Retail
g. FDI in retail
Technopak Advisors Private Limited | Confidential

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6. CASE STUDIES………………………………………………………………………………………50
a. International Timewear Industry
b. Other Indian Sectors
i. Growth of Mobiles as a lifestyle industry in India
ii. Duty reduction in other Indian industries and its effect
7. RECOMMENDATIONS OF THE REPORT………………………………………………...67
ANNEXURE
ABOUT TECHNOPAK
ABOUT AIFHI

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1. EXECUTIVE SUMMARY

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2. BACKGROUND
Time wear in India has seen a gradual transformation from a time keeping device to a fashion
accessory. This evolution has been ushered by many factors such as changing consumer
dynamics, increase in disposable income, growth of organized retail, entry of international
brands, etc. However the industry has not been able to achieve the scale or size as per its
potential and is growing at a very modest 8-10% with the penetration levels of just 27%. The
industry can grow at a much faster rate given the buoyant economy, increasing incomes and low
penetration. However the industry is facing challenges such as the inadequate retail
infrastructure and unfavorable government regulations and policies. There is a serious need for
bringing about a change and remove the impediments to the growth of this industry. This
whitepaper is a step in this regards with the joint effort of The All India Federation of Horological
Industries (AIFHI) and Technopak Advisors.
AIFHI is the watch industry’s apex organization in the country, comprising of leading watch
manufacturers and marketers, including Titan, Timex, Maxima, Swatch, HMT, Citizen, Casio and
LVMH. AIFHI consists of Indian as well as global companies. It identifies key opportunities and
issues for the industry, and ensures that these are appropriately addressed at all quarters. It has
worked with the Government and other apex industry associations to ensure that there is a
robust framework for the industry. The federation has been active in addressing challenges
posed by the unorganized sector.
The AIFHI has commissioned Technopak to prepare a white paper on the watch industry in India
covering its current status, market size and structure, growth, key trends and all its current and
future challenges. The purpose of the study is to provide a deeper understanding of the market
to the government and other agencies and use it as a basis for putting forth industry grievances
and initiate changes in the policy framework so as to promote legitimate and beneficial growth
of the industry.

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3. RESEARCH METHODOLOGY
a. Secondary Research
The objective of the secondary research was to gather market data on the sector, and
understand opportunities and challenges that face the sector and other issues which could
be validated in the primary research
We have extensively utilized Technopak’s internal Body of Knowledge, various media

reports and other reliable data sources.
b. Primary Research
Technopak consulting team interviewed top/senior management of member companies,

watch component manufacturers and other industry experts to gather information, to get
their perspective on the industry and to understand their expectations from the
government/policymakers.
Technopak team has conducted 24 personal / telephonic interviews with individuals from
member companies and industry experts to understand from them their views on:
 Size, growth, structure and segments of the sector
 Taxation policies & its implications
 Need gaps and pain areas in the industry
 Major deterrents for the growth of this sector
 Future prospects & trends
 Industry expectation from the government and policymakers

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The various people interviewed are
Sr.
Company Name Designation
No.
Watch Companies
1 Citizen Watches (India) Pvt. Ltd. Mr. Katsusuke Tokura Managing Director
Citizen Watches (India) Pvt. Ltd. Mr. Takeshi Okada GM – Marketing
Sr. Manager-Marketing,
Citizen Watches (India) Pvt. Ltd. Mr. Sandeep Hegde Commercial, HQ Sales & AS
Service
2 Classic Times Mr. Abdul Rehman Shipra Director
3 Fossil India Private Limited Mr. Vasant Nangia Country Manager
4 Morellato India Pvt. Ltd Mr. Santosh Kumar Vice President
5 HMT Watches Limited Mr. S Paulraj Managing Director
6 LVMH Watch & Jewelry India Pvt. Ltd Mr. Manishi Sanwal General Manager
7 P A Times Industries Mr. Manjot Purewal Managing Director
8 Priority Marketing Mr. Sailesh Sangani Director
8 Priority Marketing Ms. Manisha Sangani Director
9 Raymond Weil Mr. Sebastian Lukose VP Sales & Merchandising
10 Seiko Watch India Pvt. Ltd. Mr. Tetsuji Ishimaru President
Seiko Watch India Pvt. Ltd. Mr. Niladri Mazumdar VP- Sales & Marketing
Seiko Watch India Pvt. Ltd. Mr. Vikramjit Bhattacharya GM-Finance & Admin India
11 Swatch Mr. Partha Dattagupta Country Manager
12 Timex Group India Limited Mr. V.D. Wadhwa Managing Director
13 Titan Industries Mr. Harish Bhat Managing Director
Titan Industries Mr. S.D Gopalakrishnan Commercial Head
Titan Industries Mr. Raghunath Chief Manufacturing Officer
Manufacturers
1 SK Times Mr. Sailesh Owner
2 VBL Innovations Mr. Harsh V. Bhuwalka Managing Director
3 Best & Young Engineers Pvt. Ltd. Mr. Ramesh Director
4 RK Industries Mr. Denish Owner
Publications/ Academicians
1 Trade Post Mr. Hemal Kharod Managing Director
Trade Post Mr. Mihir Kharod Editor
2 WMR Mr. Sunil Karer Managing Director
3 En theos Mr. S Nagarajan Managing Partner
4 IIM B Dr. Y.L.R Moorthy Prof.-Marketing
Retailers
1 Shree Maruthi Enterprise Mr. Ram Prasad Owner (Titan Franchisee)
2 Titan Franchisee Mr. Ramesh Owner (Titan Franchisee)
3 Arun Distributors Mr. BK Singhania Owner (Titan Redistributor)

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4. OVERVIEW OF INDIAN TIMEWEAR INDUSTRY
a. Sector Scan
i. Market size, structure & segmentation
The Indian time wear industry is estimated at ` 4,000-4200 crore. The industry has been
witnessing a low growth of 8-10% from past few years. However it is expected to grow at 12-
15% in next few years. A large part of this growth is expected from youth and luxury segment of
consumers.
By volume the watch market is estimated at 460 lakh pieces annually. Even at such annual
volumes, India's penetration of watches is amongst the lowest in the world. It is estimated that
the watch market penetration in India is 27% only. It is also estimated that just 3.5% of the
population owns multiple watches.
Structure
The organized players in this sector control 40% of the volume of the industry. Titan is a
dominant player in the market and alone controls 60% volume of the organized market. Two
other significant players - Timex & Maxima control around 10% of the volume of the organized
market. All these players mainly operate in the sub ` 3000 segment. All the other watch
companies together constitute the other 30% of the organized market. The unorganized market
consists of smuggled watches, cheap imported watches, watches assembled by small
unorganized players, watch wholesalers and repairers. Cheap components from China or other
Asian countries are used to make such watches.
Around 60% of the market by value is controlled by organized players. Of the organised market,
Titan controls around 45%. All the other players control the remaining. The unorganised players
usually operate in the sub ` 500 price range and distribute their goods through small watch
retailer and repairers. Fake watches too form part of the unorganised market and are
distributed through popular markets where imported goods are sold in every major city. The
unorganized market accounts for 40% of the Indian time wear industry. Many organised players
from India have placed their own brands in low price segment to counter the challenges from
the cheap watches in grey market.
Segmentation
Segmentation of the time wear market is done mainly on the basis of price, age and gender.

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1. Price based segmentation
The market is segmented into six key price bands namely, Economy, Mass, Mid, Fashion,
Premium, Affordable Luxury and Luxury/Prestige.
Watch Market Segmentation by Price – Volume & Value

` 4200 crores 460 lakhs
Luxury & Prestige 525 0.2
Affordable Luxury 275 0.9
Premium 180 1.5
Fashion 320 6
Mid 1200 80
Mass 1050 120
Economy 650 250
Value Volume
Source: Technopak Analysis
Figure 1.1 shows the various segments and watch brands alongside indicative price range,
segment market sizes by value & volume and growth rates.
Figure 1.1: Market Segmentation by Price
Segment Volume (lakh Price Range (`) Value (` crore) Growth rates
pieces)
Economy 250 <500 600 – 650
Mass 110 500-1000 1000 -1050 5-7%
Mid 80 1000-3000 1200
Fashion 15 3000-8000 300 – 320
Premium 4 8000-25000 150-180
15-17%
Affordable Luxury 0.9 25000-50000 250 – 275
Prestige & Luxury 0.1 50000+ 500-525

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The Indian Time wear market is estimated at ` 4200 crores with an annual volume of around 460
lakh pieces. Economy and Mass segments form around 80% of the market by volume and
contribute to only 40% of the market by value. Whereas Affordable luxury and luxury segments
are estimated to contribute around 20%of the market by value and have a meagre volume of 1
lakh pieces.
Economy & Mass Segment: The economy segment caters the sub ` 500 segment. Only two
national players Titan and PA Time Industries from the organised market with their brands
Sonata and Maxima respectively cater to this market. Many regional brands such as Rochee,
V.I.P, operate in this segment. The market is however largely controlled by the unorganised
players.
All the organised players that operate in the economy segment also operate in the mass
segment with majority of the volumes for these brands coming from this segment.
Mid Segment: Brands such as Titan, Timex, Citizen that used to cater to the mass segment have
increased their offering in the higher price range and moved to the mid-segment. It is one of the
largest segments by value. However the growth in this segment is stunted at 5-7%.
Fashion Segment: The fashion segment consists of brands that appeal to the customer more on
the aesthetics and brand association rather than technology advancement. Many of the fashion
brands, designer labels such as Diesel, Esprit, Fossil, Giordano, Tommy Hilfiger, Guess, Kenneth
Cole, Police, etc. operate in this segment.
Premium & Affordable Luxury Segment: This segment caters to consumers who want to show
others that they have arrived. The growth of this segment in largely associated with the stock
market. As more wealth is created the segment grows faster. Some examples are Balmain,
Guess Collection, Oris, Hamilton, Seiko, Tissot, Xylus, Baume & Mercier, Dior, Longines, Mercier,
Morris, Rado, Tag Heuer, Tudor etc.
Prestige & Luxury Segment: This segment includes unique watches for the people who have the
taste for expensive watches. They are designed for connoisseurs who appreciate the
craftsmanship and skills of watchmakers. Consumers of these brands treat the watch brand as a
reflection of their own personality. These watches are often gold plated, diamond studded and
used as left arm jewellery. Few examples of watches in this segment are Harry Winston, IWC,
JLC, Patek Philippe, Piaget, Vacheron Constantine, Ulysse Nardin, Breitling, Bvlgari, Cartier,
Montblanc, Omega, Rolex etc.
While the Economy, Mass and Mid segments account for the highest value and volume share in
the market, their growth is very slow at 5-7%. In near future this segment is expected to grow at
much slower pace or even de-grow.

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On the other hand the fashion, premium, affordable luxury and prestige & luxury segments are
growing at a much faster rate of 15-17%. Although these segments are largely driven by brands
it does have a significant grey market in the luxury and prestige segment.
Currently the structure of the market is that of a pyramid with mass segment being the biggest.
However in years to come (5-10 years), the market will be an inverted pyramid as the value
share of luxury and prestige watch segment will be the highest. This structure will mirror most
international developed markets.
3. Gender based segmentation
The overall time wear market is split 60:40 amongst men and women. However there are brands
that have more focus on only one of them. For example, Dior, Esprit & Guess have a greater
share of their range and sales from women whereas Tag Heuer has a greater share of their
range and sales from men. The gender-wise split of sales in the fashion segment between men
and women is estimated 65:35.
4. Segmentation by Type
The watch industry can be further grouped as Functional, Fashion and Swiss segments.
Figure 1.2: Market Segmentation by Type
Functional Watches: A functional watch offers utility to the end user. The user may look at the
watch either only as a time keeping device or as a device that may help take care of his daily
activities. A functional watch may have one or more functions such as stop watch, chronograph,
water resistant, etc. A company offering functional watches focuses on the technological aspects
of the watch. Most of the watches from Economy, Mass and Mid segment are a part of this
classification. This segment accounts for almost 70% of the watch market in India. It is a slow
growing segment in single digits of 5-7%. Few brands that cater to this segment are HMT, Titan,
Timex, Maxima, Citizen, etc.

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Fashion Watches: The fashion segment is one of the fastest growing watch segments and
includes brands like Diesel, Esprit, Fossil, Giordano, Guess, DKNY, Kenneth Cole, Police, Swatch,
Titan, Tommy Hilfiger etc. This segment is for consumers who pay a lot of attention to the
aesthetics of the watch. Apart from accessorization and embellishments on watches, consumers
prefer designer collections in this segment. This segment does a lot of experimentation with
size, shape, colour of the straps, dials, accessories, etc. It mainly caters to the youth segment
that likes to wear a variety of colourful dials and straps. The emphasis is on making the watch
more attractive for the consumer who already owns a watch. This segment accounts for 8% of
the watch market. Fashion segment in driven by youth who focus clearly on looks, features,
aesthetic appeal of the watch. Growth of organized retail has fuelled growth of this segment
with increase in point of sales.
Swiss Watches: The premium or affordable luxury watches and prestige or luxury watches fall
under this segment. It forms more than 22% of the watch market in India. This segment is
dominated by 7-8 large brands/groups in India who hold around 90% of this market. This is a
growing segment owing to a major shift in terms of consumer behaviour such as

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ii. Current supply chain overview
Watch Market Supply Chain – Domestic Manufacturer / Assembler
Component Manufacturer
Assembling / Manufacturing
*Movement Manufacturer
Distributors Retailer
* The internal mechanism of the watch is called the movement. Source: Technopak Analysis
Watch Market Supply Chain – Importer / Distributor
Subsidiary / Licensee
Retailer
(Importer Distributor)
The major watch companies around the world do not produce all the components required in
the assembling / manufacture of a watch. They rely on a host of watch ‘movement’ and
component manufacturers. The companies usually have their own assembling unit but may also
outsource the activity. HMT from India is one of the very few integrated watch company in the
world that manufacture all the components & movements and assemble the watches ‘in-house’.
Once the watch is manufactured, the company may sell the watch either to the retailer or to a
distributor depending on the target segment. The watch market supply chain is explained below.
Movement Manufacturing: A movement in watch-making is the mechanism that measures the

passage of time and displays the current time. Movements may be entirely mechanical, entirely
electronic, or a blend of the two. There are very few companies in the world that manufacture
movements for watches. Therefore it is common for the companies that produce movements to
supply it to all the other watch manufacturing companies in the world. Indian companies such as
Titan and HMT have the know-how for producing movements. International companies that
make movement in-house are Citizen, Seiko, Richemont Group, Swatch Group, etc.

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Component Manufacturing: Besides the components required for the production of the
movement, there are other components such as band, bezel, case, chronograph, clasp, crown,
crystals, dial, hands, markings, sub-dials, tachymeter, etc used in the manufacturing of watches.
Most of these components are manufactured in India. However China is a large manufacturer of
components and supplies many components to manufacturers in India and around the world.
There are two main centres for manufacturing of watch components in India: Rajkot in Gujarat
and Hosur & Tumkur in Karnataka. While Rajkot serves the unorganised and replacement
market in India, Hosur & Tumkur supplies to the organised players.
Assembling / Manufacturing: Both the movement and the components are then put together in
an assembling unit. Major watch manufacturer brands such as HMT, Maxima, Titan, Timex,
Fossil group have their own assembling unit in India. Brands and watch groups such as Swatch,
Citizen, Casio and others import completely built watches into India. Swiss companies cannot
assemble in India due to Swiss Watch Federation regulations. The organised players have their
assembling units in Hosur in Karnataka and Baddi and Solan districts in Himachal Pradesh.
Subsidiary / (Licensee / Distributor): Many international watch companies are operating in

India either through a joint venture or a wholly owned subsidiary or a licensee or a distributor.
The assembling / manufacturing of watches takes place in a foreign country and these
companies import completely built watches into India. These companies at present do not have
incentive (availability of infrastructure, skilled manpower & raw material and favourable tax
structure for manufacturing in India) or large enough volumes to set-up assembling in India.
An international company may open its wholly owned subsidiary in India and get a ‘Cash & Carry
License’ to operate. The subsidiary company cannot invest in retail due to regulatory restriction
currently in India. However the company can invest in setting up a manufacturing or an
assembling plant.
If the international company only deals in a single brand, it may enter into a joint venture with
an Indian company and own up to 51% share of the company. Under the current regulations,
the joint venture company has the right to open retail stores.
The company can operate in India through a Licensee or a distributor. Here the company either
authorises the local company to manufacture watches under its brand name for the local
market or directs the local company to import watches. The licensee / distributor represent the
company in the country and looks after both the distribution and promotion of the brand.
Distributor: Watch companies such as Titan, Timex, HMT, Citizen, Maxima have appointed
distributors for their business. It is because they have products that cater to the masses and
require a wider network to reach to the customer. On the other hand, companies with brands in
the fashion, prestige and luxury segments have not yet appointed any distributors. Instead these
companies manage the distribution on their own. Two factors affect such a change in strategy
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 The product is retailed through limited point of sale and does not warrant the need for
distributor
 Since most of these products are imported, the margin in the distribution chain is little and
would not make economic sense to appoint distributor for the business
Retailer: The last mile connectivity to the consumer is provided by the retailer. The mass-
segment brands such as Titan, Timex and regional players such as Rochee, Cizer together have
the widest reach in the country with a reach in over 2500 towns and are retailed in different
organised and unorganised retail channels. The fashion segment brands are retailed through
multi-brand watch retailers, department stores and exclusive outlets. The reach of the luxury
brands is limited to the top 7-8 cities in India. These watches are sold through exclusive watch
retailers selling multiple brands.

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iii. Watch Assembling & Component Manufacturing in India
India is one of the few countries besides Switzerland, Japan US, Taiwan & China that has watch
manufacturing capabilities. However India has not been a major player in the international
watch market. It produces and sells to cater to the domestic demand which is expected to grow
many-fold. It is predicted that there will be a capacity shortfall of 30 million watches in India in 5
years time. At present, many international brands do not have an assembling unit in India as the
domestic market has not matured enough to give sufficient volumes. India’s potential as the
manufacturing hub for the world has not been realized.
Manufacturing has traditionally moved to countries that develop capabilities and scale (Japan –
China – Taiwan – Vietnam, etc) at a cost effective price. The companies catering to the mass,
mid and fashion segments are most likely to make India as one of their assembling and
manufacturing hubs. It will help them diversify their manufacturing risk across different
countries. Also the domestic demand in India is set to grow many-fold and will provide them
enough volumes to justify local manufacturing. Owing to rigorous Swiss manufacturing, sales
procedures and regulations, the Swiss brands do not consider making entire watch in India.
However, India has the capability to become a manufacturing hub for components, accessories,
bags, boxes and other paraphernalia to these brands and for all brands across watch segments.
Watch unlike automobile is a precision engineering product. Watch making is very complex as
each part of the watch is small and there are many moving parts within the watch. The main
parts of the watch include movements, case, bracelet, hands, dial, back cover, crown & crystal.
Movement Manufacturing – Seiko and Citizen are the two major movement manufacturers in
the world producing approximately 700 million movements annually out of the total world
production of around 800-900 million movements of the good trade. Swiss companies are the
other main movement manufacturers in the world. However the Swiss do not produce
movements in large numbers and the cost of the Swiss movement is very high as compared to
the ones supplied by Citizen and Seiko. In India, Titan produces around 7.7 million movements
per year but only for internal consumption.
Movement manufacturing requires large investment in machinery and set up. It also requires
highly skilled labor. The expected return on investment from manufacturing and selling of
movements to watch companies is also not very attractive because of excess supply in the
current market. Even Titan, a major manufacturer of movement in India, is not looking to
increase its movement manufacturing capacity as it will be cheaper to buy it from the
international market.

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Case and Strap / Bracelet Manufacturing - Case and bracelet need to be manufactured in
nearby locations as the design for both the components are interdependent and the
manufacturing requires high level of co-ordination.
Case manufacturing is segmented based on raw material used to manufacture the product. Any
case made from stainless steel, brass or aluminum has a very complex manufacturing process
and requires high investment in machinery and technology. This machinery is required both for
the manufacturing and testing purposes. On the other hand plastic cases are comparatively easy
to produce and do not require high technology. In India, cases are also made from alloy,
however organized players do not prefer using cases made of alloy. Such cases are mainly used
by the unorganized sector.
Many of the existing players in India do not have all the capabilities to manufacture full cases in-
house. They need to outsource certain activities for job-work. This affects the overall quality of
the final product. India has 10-15 good quality case manufacturers.
In order to become the manufacturing hub for watches, strong capabilities in case and bracelet
manufacturing is very important. Most of the brands use Stainless Steel for case and bracelet
manufacturing. India has very little capacity and expertise for manufacturing stainless steel
cases and bracelets to cater to the international demand.
Centers of Watch Manufacturing in India
Rajkot - Gujarat is an important watch manufacturing centre in India. It produces millions of

units every year and provides employment to more than 20,000 people. Rajkot is known for
metal component manufacturing for watches especially cases and bracelets.
The quality of components manufactured in Rajkot has not been good and only low quality
components were manufactured in Rajkot. However from last 3-4 years, the quality of goods
produced has shown improvement. All major players in India have started sourcing from Rajkot.
However Rajkot is mainly producing components (90%) for the replacement market in Delhi or
Mumbai or for the duplicate or counterfeit watch market.
Hosur / Tumkur – Karnataka caters mainly to the organized market as many players are based
in Bangalore. The current players in this region are not expanding their capacities as there are
limited numbers of big buyers in India (Titan, Maxima, Timex). Many of the component
manufacturing players have one of these players forming majority of their sale and this has led
to dependence on one buyer and an unreasonable bargaining power with the buyer.
India’s Strength and Opportunities as a Manufacturing Hub
External Factors

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 Increase cost of manufacturing in China

 Higher lead time required to supply to global needs from a single location
 Diversify production risk amongst different locations
Internal Factors
 India is one of the few countries that has watch manufacturing capabilities
 India has capabilities to manufacture quality engineering products and this has been proved
by the success of auto and chemical industries here
 Prices and quality of products is competitive
 Availability of skilled manpower
India’s Weakness and Threats as a Manufacturing Hub
External Factors
 Although wage in China is increasing, the component of wage in total cost of a watch is less;
therefore shifting of manufacturing from China to India will take time.
 India needs to import most of the raw material used in watch component manufacturing
such as stainless steel, leather and synthetics.
 No watch design talent or skills available. NIFT or NID do not offer these courses. The design
skills are more biased towards aesthetics. However watch designing involves both aesthetics
and technicalities
Internal Factors
 The capacity of the existing manufacturers is not enough to cater to the requirement of
existing watch companies such as Titan, Timex. It will require huge investments to ramp up
capacities to cater to global demand
 The Quality standards set by Titan and others are very difficult for current manufacturers
with to achieve with their current set-up. The current set-up also requires investments to
adhere to international quality standards.
 Many of the processes in the manufacturing of cases are outsourced and the quality suffers
 Currently many players are only dependant on Titan and few others players such as Timex,
Maxima for their business. This has lead to a monopolistic situation in the industry with
undue advantage to the buyer. The margins for the manufacturers are less and do not allow
for any investments in machinery for growing capacities.

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iv. Evolving retail formats
With the advent of modern retail the Indian time wear industry has seen a transition from small
unorganized shops to organized EBOs, MBOs and shop in shops in department stores and malls.
One of the key reasons for this transition is the new age consumers that prefer to buy watches
from organized retail outlets than small unorganized shops or grey market. Be it high streets,
neighbourhood markets or malls, over the years the watch brands are selling their products
through different kinds of organized retail formats depending on the product offering and target
segment. These retail outlets vary in sizes depending on the locations they are in. High rentals
and lack of quality retail environment are some of the challenges that retailers in the Indian
watch industry have to face.
Benefits of modern retail in watch industry
Modern retail has contributed to the growth of the time wear industry in many ways
 Organized retail has provided watch brands with much needed visibility and reach.
 Modern retail has helped watch brands, especially the international ones in creating
awareness amongst shoppers. There are many marketing and promotional efforts which are
run jointly by the brands and retailers. Other than conventional media campaigns, retailers
are also using modern marketing tools such as social marketing and various CRM initiatives
for keeping and growing customer base and building national footprint.
 Consumers are now able to shop in an environment where they are treated to better display
from which they can choose and try out a watch, there are trained sales personnel for their
assistance and at many places an in store service centre too. Consumers can thus, have a
wholesome shopping experience.
 Modern retail and its allied services are one of the key contributors for employment in the
watch industry. Opportunities are available across the spectrum from store level front end
retail to dealers, distributors, service & repair centres etc. The service and repair centres are
largely unorganised and the growth of modern retail will fuel growth of these centres
leading to large scale employment.
Prominent organized retail formats currently in the watch market
 Multi Brand Outlets (MBOs)
Multi brand outlets are one of the most prevalent retail formats in the Indian watch industry.
An MBO houses multiple watch brands, Indian as well as International, under one roof. The

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target audience for an MBO are consumers who appreciate a wide assortment of brands and
products to choose from. First-time buyers also prefer to buy from multi brand stores as they
can compare different brands.
A large number of MBOs in Indian watch industry which are family owned and run. Most of
these MBOs are limited to a particular city. Having been in the business for many years they
have established a firm goodwill and enjoy a loyal set of customers. One of the USPs of such
MBOs is personalized selling. The owner or a family member is directly involved in most of the
purchases and often offer discounts to the customers. Examples of some of these MBOs are
Johnson Watch Company (Delhi), Kapoor Watch Company (Delhi) and Kamal Watch Company
(Hyderabad) etc.
Many watch companies have started their own chain of multi-brand watch outlets. The stores
are either owned & operated by the company or are franchised. Few examples of watch MBOs
in India are World of Titan, The Time Factory, Just in Vogue, Bezel, Zimsons, Ethos, Helios,
Helvetica, Rodeo Drive, etc.
 Exclusive Brand Outlets (EBOs)
Exclusive or mono brand outlets are retail stores that house the entire product range of a single
brand or various sub brands of a single company. The target audience for EBOs is the astute
watch buyer who is well travelled, aware and conscious about the watch brand he wears. Few
examples of EBOs in the Indian watch industry are Titan One, Boutiques by Tag Heuer, Rado,
Omega, Seiko etc. EBOs, these stores are usually situated at high streets or in malls.
Due to FDI restrictions international brands are allowed to open EBOs or mono brand boutiques
through a joint venture with an Indian partner or through a network of franchisees. While this
helps the international brands to learn more about the nuances of Indian market, consumer and
retail, it also poses these brands with a crucial challenge of maintaining the worldwide quality
standards of their brand in these partner/franchisee stores. Once the FDI regulations are relaxed
a large number of international brands are expected to go solo and open company owned mono
brand boutiques.
 Kiosks
‘Kiosk retail’ concept has become increasingly popular in the Indian retail scenario over the past
few years. It is a cost efficient and effective way to sell products in an otherwise premium rental
location like malls, the staff requirement is also minimal. Kiosks are usually located inside large
shopping arcades and mall atriums, many Indian/International watch brands have their kiosks at
airport terminals as well. Kiosks are usually targeted at ‘on the move’ consumers in a mall or at
the airport terminals. It attracts a lot of impulse buyers at these places. Most of these kiosks
carry products by a single brand. Usually the size of a kiosk ranges from 100-150 square feet.
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 Large Format Stores
Large format stores such as department stores are preferred choice of many of the watch
brands in India. Almost all department stores like Lifestyle, Shoppers Stop etc. have space
earmarked for watch retail where various Indian and international watch brands are given small
kiosk/counter space to display their products. The size ranges from 50-100 square feet.
This format caters more to consumers who want a wide variety of choice in terms of brands
across various price segments.
Large format Stores has contributed significantly to the fashion watch segment. The Department
stores are frequented mostly by young shoppers, this combined with high visibility and footfalls
induce a lot of impulse purchase for these watch brands. Although the contribution of sale of
functional watches in department stores is less, the presence across such stores is essential for
the visibility they provide.
Key challenges and scope of improvement in time wear retail
Time wear retail in India is still at a nascent stage and there is a scope for improvement in the
current retail formats. Few challenges that retail in watch industry has to face are;
 Quality retail environment, especially in the luxury watch segment is still missing in India.
Though the mall culture is growing by leaps and bounds, only luxury malls or high streets are
suitable for luxury brands to open their boutiques.
 Given the potential for growth in the time wear industry there are still not enough retail
stores that can provide the desired reach to the brands. Most of the retailers do not have a
nationwide presence. This is one of the reasons why penetration of watches is so low in
India, even though there is huge potential in tier II and tier III cities, beyond the metros and
top few cities. Rural markets are served mainly by watch repairers.
 There is ample need for luxury watch retail stores in India. The new age Indian consumer is
well travelled and expects similar kind of look, feel and variety at the watch stores in India as
abroad. In the absence of this the consumers prefer shopping abroad. In India there is no
clear demarcation of retail stores based on the merchandise they carry and so we can see
even high end stores carrying mid price range brands, resulting in a big mismatch.
 The margins in watch retail are still very low as compared to the International scenario.
Many a times the retailers have to please the value conscious Indian consumer with
discounts which further erode their margins. Other than this another significant part of the
margins goes away in form of high rentals. Due to this quality of stores in terms of ambience
and staff is made to suffer.

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 Unorganized sector or grey market also poses a big challenge to the organized watch
retailers. The grey market sells smuggled or fake watches. They use the large margins from
this to lure the consumers with more discounts.
Road Ahead
Organized retail needs to grow in terms of both quality and quantity as more and more
international brands enter Indian watch market. In order to attract customers the retailers
would have to pay attention to various aspects like product variety, store ambience, quality of
knowledgeable, well trained sales staff etc.
In future many brands would prefer going the company owned mono brand boutique route,
which would help them in improving the entire watch retailing experience and also getting
firsthand feedback on the Indian time wear consumer and market.
However, while brands would prefer exclusive boutiques to showcase their range and retailing
experience to consumers, on the other hand MBOs and SIS will give them the visibility and
footfalls. Hence coexistence amongst all formats is likely in near future.

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v. Key players & their future plans
 Casio India Co. Pvt. Ltd. (Cic) - Casio
Their focus in the future is to grow through large format stores and multi-brand outlets. It also
plans to consolidate its dealership network across 30-40 Class A cities in the country.
 Citizen India Private Limited - Citizen
The company is focussed to open new EBO on premium, high street locations. It also looks to
increase Citizen Corners in malls and other channels where there is a multi brand presence.
Citizen is looking at increasing sales in India not in terms of volume but in terms of value. Citizen
wants to tap into the large and increasing number of rich in India.
 Egana India Private Limited - Esprit, Pierre Cardin, Carrera, Puma, Cerrutti, Antonio
Bernini
The company plans to open 50 Watches & More (Own multi-brand retail outlet) stores by the
end of 2010and 100 by end of 2011.
 Fossil India Private Limited - Diesel, DKNY, Fossil, Armani, Burberry, Oyzterbay, Zodiac
The company plans to increase its point of sale count from 280 to 350 by 2011.
 Gitanjali Lifestyle (Morellato India Private Limited) - Morellato, Chronotech, Just

Cavalli, Miss Sixty, Everlast, Sector, Roberto Cavalli, Pirelli Pzero Tempo, Marvin, Philip,
Nina Ricci
Gitanjali Lifestyle plans to open 40-50 Bezel stores by next three years. It is concentrating on
building equity for Morellato and Chronotech and will concentrate on other brands once these
brands are of a decent size. The company is also looking at getting more brands into India.
 HMT Watches – HMT
HMT has been losing market share and bearing losses. As part of its revival plan, some of the
activities it plans to undertake to increase both turnover and market shares are increasing the
volume of production and sale of high-end watches, strengthening marketing network by
appointment of Territory Dealers and adoption of innovative and aggressive marketing policies.
 LVMH watches & Jewellery India Private Limited - De Beers, Christian Dior, Hublot, Tag
Heuer, Zenith

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LVMH plans to expand to 150 point of sale for Tag Heuer and 34 for Dior. It plans to open
around 14 mono- brand stores once FDI opens up in the sector. Joint ventures can also be
explored in this respect. It wants to expand range of Zenith in India.
 PA Time Industries – Maxima
It intends to open at least 250 EBO from 15 by 2013.
 Priority Marketing Private Limited - Kenneth Cole, Skagen, BCBGMAXAZRIA, D&G,

Moschino, Breil, Ted Baker, Aspen
It has its own chain of watch stores called ‘Just in Vogue’. It is in talks with new brands, but
waiting for change in duty structure to take it ahead.
 Raymond Weil India Private Limited – Raymond Weil
It plans to add 13 more MBO in the next 6 months
 Seiko Watch India Private Limited – Seiko
Seiko plans to open 8-10 exclusive Seiko boutiques on a franchisee model by 2012-13. In the
same period, Seiko plans to increase retail touch-points to 250 through tie-ups with multi-brand
stores. Seiko may consider setting up a factory in India in the future.
 Swatch Group India Private Limited - Swatch, Calvin Klein (CK), Hamilton, Pierre
Balmain, Mido, Certina, Longines, Rado, Tissot, Léon Hatot, Blancpain, Breguet,
Glashutte, Jaquet Droz, Omega & Tiffany & Co.
It plans to increase the number of mono brand stores. It plans to open 100 Swatch exclusive
boutiques if FDI opens up. It also looks to move beyond the top 6 cities to top 20 cities. It will
establish presence in department stores if the business terms are agreeable.
 Timex Group India Limited - Timex, Ecko, Nautica, Valentino & Ferragamo
Timex India will be investing about $ 1 million in retail expansion for both company-owned
outlets as well as franchised stores and increase the number of ‘The Time Factory’ outlets to
140. It expects to grow the share of revenues coming from own retail network from 20% to 33%.
It plans to launch high-end international brands such as Versace and Ferragamo in India.
 Titan Industries - Sonata, Zoop, Fastrack, Titan, Xylys, Nebula, Raga, Tommy Hilfiger and
Hugo Boss
Titan Industries plans to invest ` 1,000 crores over five years to become the worlds’ third largest
watch company by 2015. As part of the growth plans it wants to establish a solid foothold in the

2010 Ver1 25
premium category. It also wants to focus more on its international markets. It plans to increase
the count for Helios stores to 50. It also plans to increase the number of Fastrack EBO and kiosk
to 100.

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b. Swot analysis of the industry
Strengths and Opportunities
The Indian timewear industry has enormous potential to grow fuelled by a liberalized Indian
market and rising consumerism. The inherent strengths of this industry are giving way to a lot of
favourable opportunities for it to grow further.
 A large and growing population base
India’s ever growing population presents the watch industry with an unparalleled captive
market to target. With a large young population (51% of population is less than 25 years), an
ever growing middle class (500 million) and increase in high net worth individuals (126,700*
individuals in 2010; HNWIs are individuals with financial assets in excess of USD 1 million) the
consumer profile is favourable for the watch industry.
 Large under-penetrated market
The time wear market in India is largely under-penetrated. Almost 70% of the available market is
not captured including rural India which is relatively untouched by the timewear industry.
Despite having a good number of high spenders and close to 270 million middle class
consumers, the rural market penetration levels are still very low. Kids market for time wear is
also a largely untapped segment. Currently there are very few brands catering to the kids
segment. Thus there are vast market opportunities for the timewear industry players that need
to be exploited.
 Favourable Consumer Trends
The Indian consumer has evolved over the time. With change in lifestyles and high disposable
incomes, their purchase behaviour and product preferences have changed a lot. They are more
fashion conscious and are well aware about international brands. This in turn is helping an
otherwise utility device, wristwatch, to evolve into a lifestyle accessory, a fashion statement. It
has also given way to the trend of multiple watch ownership. Watches are no longer considered
to be a lifetime purchase and consumers are increasingly buying more watches to complement
their lifestyle. Multiple watch ownership is a rising phenomenon especially amongst the youth
segment. Industry players are further fuelling multiple watch ownership through brand
promotions, discounts etc.
 Capability to become a manufacturing base & exporter

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India is poised to become a successful manufacturing base of watch and watch components in
the world. A host of factors like, rich heritage in watch making, easily available cheap labour, low
priced raw materials, intellectual workforce and technical knowhow are strong enablers for the
development of the watch manufacturing prowess of India.
Currently due to rising costs in China and other South Asian countries, many International
brands, especially in the mid price segment are on the lookout for quality and price efficient
manufacturing set ups. India would surely be able to prove a good option there, provided it is
able to match or better the process efficiencies and costs and there is support in terms of
infrastructure and policies from the Indian government.
Exports are another domain that is gearing up. Few Indian watch companies have successfully
made their mark in the international market with their quality products. Some of them have also
forayed into exports to these countries. In times to come exports to international markets
presents a big opportunity for the Indian timewear industry.
 Influx of new entrants in the market
Many international brands are entering the market thereby increasing competition. This has
proved extremely beneficial for the overall growth of the Indian timewear industry with both
the Indian and International players going the extra mile to offer differentiated product offerings
and upgrade service levels. Consumers, in turn, have more product options and varied price
ranges to choose from. With the relaxation of FDI norms the influx of international brands is set
to increase and this will further help the Indian time wear industry to mature and increase its
market potential.
 Evolution of modern retail
Organized retail growth is a big strength and opportunity for the Indian time wear industry.
Selling a watch through a modern retail store that has good visual merchandising, well organized
displays etc. helps tremendously in adding more to the consumer experience. Malls and
department stores are thus proving to be a key driver for impulse purchases of watches. With
the opening up of FDI many international retailers will set shops in India and this would further
help in growth of organized retail in Indian timewear industry.
Weakness and Threats
The Indian time wear industry is not devoid of few weaknesses that could pose threats to its
growth.
 Stringent Government policies

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Government policies and regulations have proved to be a big obstacle in the growth of the
Indian timewear industry. Key impediments have been high taxation, high duty structures, value
cap on DEPB and packaging regulations.
 Taxation policies
o Low abatement rates: Currently the rate of abatement on watches is fixed at 30% of the
MRP. With lower abatement rate, there is a higher incidence of tax by way of excise
duty or countervailing duty.
o Variable tax rates: Variable tax rates, like VAT, Octroi etc., across states result in loss of
income for watch companies since MRP is fixed for the entire country and in these
regions the company needs to absorb the additional burden of taxes.
o Multiple MRP: A company is allowed to have multiple MRP printed on the goods.
However the tax is calculated on the higher MRP for all the goods. This increases the
overall tax burden on the goods irrespective at what MRP the goods are finally sold at.
o Service tax: In order to build a distribution network, new brands that are entering the
market need to provide their goods to the retailers on consignment. The income earned
by the retailer on any sales from such consignment goods attracts service tax. This
increases the overall burden of taxation for the companies.
 Duty structure - Currently the duty structure on imported watches is very high. This has
resulted in low earnings for importers and distributors as well as lower margins for the
retailers that result in quality degradation at retail stores. More so, there is no duty on
luxury goods globally, hence the high duty on luxury products in India is posing a barrier to
the growth of the market. Because of the high duty on these goods Indians prefer to go
abroad and shop for luxury watches. This has been impacting the sales in Indian market in a
big way. The players in the timewear industry have been demanding a rationalization in the
duty structure from a long time now but there has been no change in the government
policies on it whatsoever. This is thus, proving to be a big impediment to the growth of this
industry.
 Packaging regulations
Indian government classifies watches as packaged products and therefore fall under the
jurisdiction of Weights & Measures Act. This has multiple implications on the watch
industry such as
Taxation: As watches are covered under this Act, the category is being viewed under section
4A of the Central Excise Act. Under Section 4A, the tax on products is levied on MRP. If

2010 Ver1 29
watches are removed from the purview of this Act, the category will fall under Section 4 of
the CEA and the tax will be levied on the transacted value of the product thus lowering the
overall incidence of tax.
Operational Difficulty: Retailers face difficulty not only in stocking multiple watch boxes
considering the limited space but they have to also ensure that the right box corresponding
to the watch bought is given to the customer.
Non compliance to the act results in stock seizure, and fines in case of an inspection.
 Value Cap on DEPB benefits
DEPB benefits of 7% of FOB value have been capped at Rs. 600 across all price segments.
DEPB is not on components but only on finished watches. Because of such policy decisions,
India’s price and cost competitiveness in international watch market is not there. All this
indirectly affects India’s position as a future hub for manufacturing.
 Slow transformation of consumer market
The Indian consumer is going through a slow state of transition. The penetration level for
watches is still very low at 27%. Small cities, towns and rural areas are still driven more by
functionality, utility, price and durability of a wristwatch rather than lifestyle preferences or
making fashion statements. It will take some time before the market across all cities and
towns of the country completely matures in terms of awareness for branded products and
more so for international brands.
 Large unorganized market and threat of counterfeits
The Indian timewear industry faces a potential threat from a large unorganized market
which is dominated by counterfeits and smuggled goods. Wrist watches in almost all price
segments are marred by counterfeits. There is a large market of fake watches especially in
the low and high end segments which is one of the key pain areas for the time wear
industry. The low end price segments are mostly dominated by grey market and Chinese
imitations which are cheaper and of low quality. In the higher price segments there are
many retailers who sell smuggled international watches at great discounts without bills
thereby attracting a significant consumer spend and eating away from the organized market
share. This causes potential sales loss to brands as well as results in their image dilution as
unsuspecting consumers buy low quality fake products.
 High cost of captive manufacturing
High cost of captive manufacturing remains a future risk. Brands can seek to address this by
establishment of low-cost assembly units, outsourcing components other than critical ones,
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increasing the use of automation in manufacturing plants and several other measures to
improve productivity.
 Perceived threat from mobile phone industry
Watches have a perceived threat as a time-keeping device, due to the increasing

penetration and use of mobile phones which also displays time. Consumers have multiple
choices of feature rich mobile phones available at very affordable prices today. Brands can
address this issue by introducing multi functional watches, positioning them as fashion
accessories and consistently launching new designs to capture consumer demand. Kids
segment can also be targeted to induce watch wearing habit from early age.
c. Consumer trends and their impact on the industry
Watches are good examples of how the market has thrown up various options for transforming
consumers and how consumers on their part have boldly upgraded themselves.
Till a few years back, time-wear was dominated by home grown brands or brands targeting the
mid-market. With rising incomes and a growing population, brands started to realise the huge
potential of the market and the consuming class decided to capture the buoyancy in premium
retail business in India.
The key trends that can be seen amongst consumers in the Indian timewear industry are;
 Shift in attitudes
There has been a gradual shift in consumer attitudes in the timewear category, from utility and
functional need to self indulgence.
The new age watch buyer is a young, aspiring individual with high disposable income. The
consumer does not see the watch merely as an instrument for keeping time; a watch is now
considered a fashion accessory and the brand name a fashion & style statement, a reflection of
their personalities. More so with the advent of mobile the relevance of a wrist watch is not
limited to time keeping. Consumers are now looking for multi-functional, feature rich watches
with style.
Watch purchase is no more just a onetime event; it is not limited just to special occasions,
festivals or important milestones in one’s life. Consumers are buying watches to make a style
statement and are constantly looking at upgrading their day to day lifestyle, this is giving way to
the rising multiple ownership trend for watches.
 High disposable incomes

2010 Ver1 31
High disposable incomes have also helped in decreasing the price consciousness in general
amongst the Indian watch buyers. Consumers today aspire to upgrade in terms of brands and
price points and are willing to pay a premium for quality product.
 Global Indian
Consumers today, mainly young professionals, are exposed to international trends and have an
increased desire to adapt to the western culture. They are increasingly brand conscious and
most of them are well aware of the international brands owing to avid national and
international travel, internet surfing and interaction with clients and friends abroad etc.
 Increased purchasing in ‘affordable luxury’ segment
India is seeing a surge in luxury watch buying; the premium and affordable luxury watch
segment is growing at a rate close to 15-17%. This market is mainly driven by the high net worth
individuals whose numbers are also growing by the day. India has almost doubled its high net
worth individuals since last year and currently there are close to 126,700 high net worth
individuals in India.
 Value seekers amongst luxury consumers
Value consciousness is very characteristic to most of the Indian consumers and same is the case
with consumers in the luxury and prestige end watch segments. Indian luxury consumers are
very ‘value conscious’ and discreet and are willing to approach more than one shop to buy a
watch in search for better discounts and deals. Many of them also prefer to shop for the same
brand at an overseas store due to availability of superior quality, better prices and more variety
than in India.
Impact of consumer trends on the Indian timewear industry
Indian consumers are changing and the industry players are responding to these changes and
are redesigning their strategies as per the demands of the new age watch buyer. The key
impacts of changing consumer trends on the timewear industry are;
 Increased emphasis on design and innovation: Indian brands are making sure that they have
a number of international designers working with them for constant renewal of ranges and
introducing new and exciting designs. There is also greater focus on technological features
and innovations.
 More focus on marketing and promotion: Few brands have started aggressively marketing
and promoting their products through increased media spends and influential brand
ambassadors to attract and spread awareness amongst consumers.

2010 Ver1 32
 Changing face of watch retailing: The face of watch retailing is changing fast in line with the
demands and awareness of consumers. The old watch retail shops are not good enough for
the consumers. Today there is more stress on better display of watches, more variety, well
informed sales staff, international look and feel of the store, attractive store ambience etc.
More brands, especially the fashion segment, are retailing watches through shop in shops at
department stores and malls as there are a lot of footfalls and likely impulse purchase
incidences.
However, the premium and luxury segment is still struggling in terms of quality retail; there
is a lack of retail chains with nationwide presence, displaying complete ranges of high end
watches, having quality trained sales staff to interact with luxury consumers. Brands are
doing their bit by training the sales force, conducting audits and mystery shopping etc. to
ensure that the Indian luxury consumer can buy any watch he wants in India itself.
Many international brands are refraining from opening EBOs as the price policy is strict and
is governed by the parent company. The market is nascent and they are yet to understand
the nuances of how an Indian shops for watches. So they are concentrating on more sales
through MBOs though brands discourage discounts most of the retailers at MBOs are willing
to offer huge discounts in order to grow and keep customers.
 Change in product strategy: Brands have learnt that consumers need to be offered entry
level products to help them upgrade. In the affordable luxury segment, many brands
have introduced entry level products for inducing trials. Going forward, international
luxury brands are expected to introduce semi-premium lines for greater penetration or
introduce more brands from their umbrella in different price segments. The availability
of greater variety and brand names will act as a medium to graduate the Indian
consumers from the current mid-segment to super premium and affordable luxury
brands.
d. Key drivers of growth
There are a number of factors that are contributing to the growth of the Indian time wear
industry the key ones are as follows:
 Growing Indian economy
India is the eleventh largest economy in the world by nominal GDP and the fourth largest by
purchasing power parity (PPP). Indian economy currently has a GDP of USD 1,370 billion,
growing at 7.2% in 2009, and is expected to touch almost USD 3,100 billion in the next 10 years
in real terms. India has witnessed unprecedented levels of economic expansion and is expected

GDP Growth %
2010 Ver1 33
to overtake China as the fastest growing major economy by 2018. It is poised to become bigger
than the current size of countries like France, UK or Italy by 2020.
 Favourable demographics
Favourable consumer profile in terms of age and income groups has given a boost to the watch
industry
o Growing population and rapid urbanization
India, today, is home to ~1.19 billion people, and it is expected to reach 1.5 billion by 2025. The
population has almost tripled since the time of independence. Rapid urbanization is also taking
place with more city oriented growth. By the year 2011 there will be around 65+ cities with
million plus population.
o Young population
51% of Indian population is less than 25 years old. More than 20% of the Indian population lies
in the youth segment which is 15-24 years of age. There are around 20 million youth in the top
100 cities in India and 40% of these are in the top 8 cities. They start earning early and hence
have enough disposable income to spend on lifestyle products. They are brand conscious, have
high aspirations, are attracted by western lifestyle and are well aware of the international
brands.
o Growing middle class
The growing middle class in India is an important growth driver for the watch industry. The
aspirations of middle class consumers are growing and they are willing to spend their disposable
incomes on products to improve their lifestyle. The Indian middle class today stands at more
than 500 million consumers (~270 million consumers in rural India and ~230 million consumers
in urban India) off which ~80 million are in top 100 cities and ~30 million are in top 30 cities
including metros and mini metros.
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o High disposable incomes and more spending power
High disposable incomes mainly amongst middle class and young consumers has resulted in
increased spend on lifestyle products like watches and mobiles. They are constantly looking at
upgrading to bigger brands and higher price points.
o Growth in High Net Worth Individual population (High Net Worth Individuals as those
who hold at least USD 1 million in financial assets)
The population of High net worth individuals (HNWI) has seen more that 50% growth in 2009.
Currently there are there are close to 126,700 high net worth individuals in India. This has
resulted in an upsurge in sales of luxury timewear. This set of consumers considers luxury and
prestige segment timewear buying as a lifestyle investment.
 Change in the Indian consumer mindset
Indian consumers have seen a major shift in their mindset and attitudes over the last few years
o Shift from functional utility to fashion accessory and aspiration
For consumers today a wristwatch has made the shift from mere timekeeping
devices/instruments to being a fashion accessory. Time wear has become more of a lifestyle
accessory this has also increased multiple ownership incidences. A watch is seen by its wearer as
a reflection of his/her personality, as a style statement, new age consumers aspire to buy
different brands and upgrade to higher price segments. From mere gifting occasions like
festivals, birthdays, weddings etc., the trend today has shifted towards self indulgence.
o Increased awareness and brand consciousness
Indians are very well-educated and aware of Indian and International watch brands including all
luxury brands. Emergence of the IT sector in India has spearheaded a new revolution where
Indian consumers are getting high global exposure and aspire to adopt western culture. This has
also increasingly made them aware of international brands. Today’s new age consumers are well
travelled and due to exposure to internet they have increased fashion consciousness and are
more aware of branded products, be it Indian or International. Brands give them a sense of
belongingness and hence consumers are more interested in buying branded watches.
o Growing trend of multiple watch ownership and replacement
Earlier watches were bought or gifted only on festive occasions or certain milestones of life like
graduation, birthdays, weddings etc. Today watches are no longer just a onetime buy and
consumers are increasingly buying multiple watches to suit their lifestyle demands. Multiple
ownership has been one of the key drivers for growth of watch industry in India. Brands have

2010 Ver1 35
further promoted this by using accessorization, highlighting technological advancement and

collectible value of watches etc. Replacement demand for watches is another growth driver and
brands often use exchange schemes and discounts to promote the same.
 Increased investments in the time wear market
Investment in this category is a growth driver, many Indian and International brands are
entering and this is a positive sign for the growth of the market.
Brands are spending a lot on marketing and media to promote their brands and create
awareness amongst consumers. Well known Indian personalities from various sectors as brand
ambassadors are one of the key drivers of their media campaigns.
Many brands are also investing in quality retail stores which are further helping in growth of this
industry.
 Influx of more international watch brands in the market
Over the years there has been an increased influx of international brands in the Indian timewear
market. This has resulted in creating more awareness and exposure for the Indian consumers.
Given the large opportunity, today Indian market is attracting almost all big brand names from
abroad. More competition from International brands is expected when FDI rules will be relaxed
in this industry.
 India uniquely positioned price wise in the watch market
Majority of watches sold in India are at comparable or marginally higher prices than in the
international market. More so retailers often offer reasonable discounts to consumers. This
encourages the consumer to buy from India itself rather than travelling abroad to buy the same.
 Introduction of new and innovative features
Technological advancement has resulted in addition of new features in an otherwise time

keeping device is also a key driver in growth of this industry. This is also a key reason for
multiple owner ship of watches.
 Growth of modern retail
The growth of modern retail has aided increased spend on lifestyle categories like timewear.
Better store layouts, ambience and eye catching visual merchandising are few factors that
prompt consumers to shop more and even impulsively at times. While timewear sales through
stand alone EBOs provides the consumers with exclusivity, the MBOs provide them a great
variety of options of both Indian and International brands all under one roof. Modern retail has

2010 Ver1 36
made a positive contribution to the overall experience of buying timewear in many other ways
like;
o Increased penetration
Growth of modern retail even in Tier II and Tier III cities has helped in increasing the penetration
of watches in the country
o Easy accessibility of watches for consumers
Modern retail has provided consumers with easy accessibility to watches. Today watches are
even being sold at gift shops, jewellery stores etc.
o Promoting impulse purchase
Growth of shop in shops inside malls and department stores has been an important impulse
purchase driver for watches
 Rise of luxury retail
Advent of malls and retail stores that target and cater to the high net worth individuals has
played a major role in growth of the luxury Time wear market. These luxury retail spaces allow
the target segment to shop in the confines of exclusiveness and have even reduced their need
to travel abroad for buying luxury goods. Many International brands have also set shops in India
are capitalizing on the growing Indian high net worth individual population.

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e. Regulatory environment
i. Taxation policies, incentives & implementation
Watches are subject to multiple taxes right from procurement of components to manufacturing
to selling it to the end consumer. The current tax structure has many components and are
provided in the table below
Duty / Tax / When is it paid Current Rate Regulatory

Incentives Authority
Excise Duty Levied and collected on 10% on MRP less Central

the goods/commodities abatement Government
manufactured in India
Abatement Reduction in the excise 30% on MRP for Central

duty calculation of excise duty Government
Central Sales Levy on inter-state sale of 2% State

Tax (CST) goods Government
Octroi Tax on entry of goods for Different across local Municipal

use/consumption within municipal bodies Authority
areas of the Local Bodies
Mumbai – 5.5%
Pune – 8%
Value Added Multi point sales tax Different across states State
Tax levied as a proportion of Government
Valued Added Karnataka – 13.5%
Delhi – 20%
Excise Duty called the Central Value Added Tax (CENVAT) is levied and collected on any
excisable goods which are produced or manufactured in India (except goods produced or
manufactured in special economic zone) and is specified in First Schedule and the Second
Schedule to the Central Excise Tariff Act, 1985. Though taxable event is manufacture or
production, duty is payable on the date of removal i.e. clearance from factory.

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Excise Duty Classification relevant for the watch category
 Assessment Value based on Transaction Value – Section 4 of Central Excise Act has fixed
the rate for products on per Kg or per quintal basis, or on a ‘%’ of 'Transaction Value' of
goods.
The Transaction Value means the price actually paid or payable for the goods, when sold
o It includes any amount that the buyer is liable to pay to the assessee in connection with
the sale, whether payable at the time of the sale or at any other time. It includes any
amount charged for or to make provision for any incidental expense for sale of the
goods and may include advertising or publicity, marketing and selling, organization
expenses, storage, outward handling, servicing, warranty, commission or any other
matter
o It does not include the amount of duty of excise, sales tax and other taxes, if any,
actually paid or actually payable on such goods.
 Assessment Value based on Retail Sale Price – Section 4A of Central Excise Act empowers
Central Government to specify goods on which duty will be payable based on 'Retail Sale
Price' fixed for the product. The provisions are as follows
o The goods should be covered under provisions of Standards of Weights and Measures
Act
o If more than one ' Retail Sale Price’ is printed on the same packing, the maximum of
such retail price will be considered
o The 'retail sale price' should be the maximum price at which excisable goods in
packaged forms are sold to ultimate consumer. It includes all expenses incurred during
the course of business, taxes, and commission payable to dealers.
Watches are regulated by the Weights and Measures Act and therefore fall under Section 4A of
the Central Excise Act. The Excise Duty is therefore paid on the MRP of the product.
Abatement: Abatement when used in terms of finances, means lessening of debt or taxes. It is
also known as a tax cut or tax relief. Abatement is a helpful measure used to reduce the amount
of taxes a party must pay.
The Central Government permits abatement (deductions) from the MRP. While allowing such
abatement, Central government takes into account traders margin and all taxes payable on the
goods. It issues a notification time to time specifying the commodities for which the provision is
applicable and the respective abatement rates

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Central Sales Tax: Central Sales Tax provides for levy and collection of tax when sale or purchase
of goods takes place in the course of inter-state trade or commerce. The taxes are administered
by the State sales tax departments and the revenue is retained by the State selling the goods.
The current rate of CST applicable is 2%. It is expected that with the introduction of GST, CST will
be abolished.
 The Act has formulated principles that determine when a sale or purchase of goods takes
place outside a state or in a course of import or export from India
 The Act also specifies and declares certain goods to be of special importance in the inter-
State trade and commerce and specifies certain rules and conditions specific to those goods.
Value Added Tax: Value Added Tax is a multi point sales tax with set off for tax paid on
purchases. It is basically a tax on the value addition on the product. The burden of tax is
ultimately born by the consumer of goods. In many aspects it is equivalent to last point sales tax.
It can also be called as a multi point sales tax levied as a proportion of Valued Added.
State Specific Regulations – Since Value Added Tax is under the jurisdiction of the State
government, many states have adopted a different rate of tax. Example the rate of tax in Delhi is
20% for watches greater than ` 5000/- and 12.5% for watches below ` 5000/-whereas it is 13.5%
flat for all watches in Karnataka. Different rate of taxes is against the fundamental principal with
which VAT was introduced.
Octroi - Octroi is a local tax collected on articles brought into a town for local use by various
local bodies like corporations, municipalities, zilla parishads, village panchayats etc. Levy of
Octroi is based on the value, weight, length and number of articles. Basis of levy may vary from
State to State or even between different local bodies within a State. In India, octroi is levied only
in major cities in the state of Maharashtra.
State Specific Regulations (Mumbai) - Octroi is a tax to be levied on specified articles at their
time of entry into the limits of the Greater Bombay for consumption, use or sale. The Municipal
Commissioner is empowered to frame rules, governing the procedures of levy, Assessment and
collection of Octroi, refund and exemption. The current rate of Octroi in Mumbai for watches is
4.5% Ad Valorem. Whereas the current rate of Octroi in Pune for watches is set between 7% at
minimum and 8% at maximum

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Watch Market Value chain

MRP
WSP

2010 Ver1 41
ii. Import duty structure & its implications
Customs duties in India are administrated by Central Board of Excise and Customs under
Ministry of Finance. The levy and the rate of customs duty in India are governed by the Customs
Act 1962 and the Customs Tariff Act 1975. Goods imported into India attract various duties and
cess. The duties that are relevant to the import of watch and watch components is explained
below
Sr. Duty Rate for Explanation

No Watch
1 Basic Custom Duty 10% Basic Custom Duty (BCD) is calculated on

(BCD) the import assessable value i.e. CIF value
of imported goods (Cost+ Insurance +
Freight + Handling Charges)
2 Countervailing Duty 10% CVD on watches is levied on MRP after

(CVD) deducting abatement (discount) allowed
on MRP
3 Abatement 30% Government provides abatement to

goods taxed on MRP. Abatement takes
into account traders margin and all taxes
payable on the goods
4 Cess on CVD 3% Government imposes a 2% Education

Cess + 1% Secondary and Higher
Education on CVD
5 Cess on Duty 3% Government imposes a 2% Education

Cess + 1% Secondary and Higher
Education on (BCD + CVD + Cess on CVD)
Basic customs Duty: All goods imported into India are chargeable to a duty called as Basic
Customs Duty and the rates are indicated in the Customs Tariff Act, 1975.
The duty is levied on Import Assessable Value. It includes Import Value of the goods + Freight &
insurance + Handling Charges

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Countervailing Duty (CVD): ‘Countervailing Duty' is imposed when excisable articles are
imported, in order to counter balance the excise duty, which is leviable on similar goods if
manufactured within the State. CVD is levied on imported goods and the rate structure of this
duty is equal to the excise duty on like articles produced in India.
In respect of some consumer goods, excise duty is payable on basis of MRP (Maximum Retail
Price) printed on the carton as per section 4A of Central Excise Act. If such goods are imported,
duty will be payable on basis of MRP printed on the packing, i.e. at MRP specified on the packing
carton less abatement as permissible u/s 4A of Central Excise Act. Since watches are governed
under Weights & Measures Act and fall under Section 4A of CEA. Therefore CVD is levied on
MRP less permissible abatement.
Abatement: Government provides abatement to goods taxed on MRP. Abatement takes into
account traders margin and all taxes payable on the goods
Education Cess: An education cess has been imposed on imported goods. The cess is 2% of the
aggregate duty of customs.
Secondary and Higher Education Cess: A secondary and higher education cess of 1% of customs
duty has been imposed
In case a watch is imported as a completely built form, a typical import duty structure is given
below. The incidence of custom duty ranges from 30% to 150% of the import assessable value
Particulars Case 1 Case 2 Case 3 Case 4
MRP
50.00 100.00 200.00 300.00
Import Assessable Value (inclusive of cost,
insurance, freight and handling charges) 25.00 25.00 25.00 25.00
B.C.D @10%
2.50 2.50 2.50 2.50
CVD @10 %
5.00 10.00 20.00 30.00
Cess on CVD @ 3%
0.15 0.30 0.60 0.90
Total Duty for Cess calculation
7.65 12.80 23.10 33.40
Cess on Duty (Basic + CVD+ Cess on CVD)
0.23 0.38 0.69 1.00
Total Duty
7.88 13.18 23.79 34.40
Duty as a % of Import Assessable Value
32% 53% 95% 138%

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5. KEY CHALLENGES & BOTTLENECKS
a. Taxation policies
Under the current tax structure, goods and services are taxed at multiple points by multiple
authorities. This has sometimes resulted in double taxation. Taxes such as VAT, Octroi fall under
the jurisdiction of the state government and many of these states have imposed a different rate
of tax. Some of the problems related to the taxation policy faced by the watch industry are given
below.
 Variable tax rate – Taxes such as VAT, Octroi are under the jurisdiction of the State and
Municipal bodies respectively. The states have changed the VAT rate on the products and
therefore it is variable across different states. Similarly Octroi is only charged in the major
cities in Maharashtra. However the MRP is fixed for the entire country and in these regions
the company needs to absorb the additional burden of taxes.
For example, Delhi has variable tax structure even within the watch product category. It
charges VAT at 12.5% for watches under ` 5000/- and 20% for watches over ` 5000/-. On the
other hand Karnataka charges VAT at 13.5% for all watches.
Similarly Octroi is charged only in the state of Maharashtra. While it is charged at 4.5% Ad
Valorem in Mumbai, it is between 7% and 8% in Pune.
 Multiple MRP – A company is allowed to have multiple MRP printed on the goods. However
the tax is calculated on the higher MRP for all the goods. This increases the overall tax
burden on the goods irrespective at what MRP the goods are finally sold at.
 Service tax on consignment sales – In order to build a distribution network, new brands that
are entering the market need to provide their goods to the retailers on consignment. The
income earned by the retailer on any sales from such consignment goods attracts service
tax. This increases the overall burden of taxation for the companies.
 Low rate of abatement on taxes – Abatement is a helpful measure used to reduce the
amount of taxes or debt a party must pay. At present, the government includes retailer
margin and all other taxes to calculate the rate of Abatement. The rate of abatement fixed
by the government on watches is 30% of the MRP. Therefore excise is charged on 70% of
the MRP of the goods. However, the actual abatement on watches should be at 45% and the
excise should only be charged on 55% of the MRP of the goods.

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b. Duty structures
The current import duty structure impacts the operations and profitability of both Indian and
International watch companies. The incidence of duties is much higher in India than in countries
such as Singapore or Dubai. Since the companies cannot adopt different pricing at their different
markets, it has resulted in lower budgets for the promotion of international brand. The
companies that manufacture watches in India do not get optimum benefits against the
components they need to import. The key challenges and bottlenecks faced by the watch
industry are given below.
 Higher Landing Price of Watches: Watches attract high import duty calculated on the
declared MRP of the product. Therefore the incidence of tax ranges from 30% to 150% on
the CIF value of watch depending on the differential between CIF and MRP value of the
watch. With high import duties, the landed cost of luxury watches in India is almost 30%
more than other international shopping destinations such as London, Paris, Milan or Dubai.
 Lower margin for brands and retailers: The brands try to maintain consistent price across
international stores however this results in lower margins for both the brands and the
retailers in India as compared to their counterpart in Europe or any other locations. This is
mainly done to absorb the high cost of duties and to remain competitive with the European
and other markets where no or very insignificant duties are levied by the government.
 Higher financing cost: Considerable inventory of watches needs to be maintained to offer
variety to the customers. Import duty is paid when one gets watches imported into India. If
the watches are not sold within a suitable period, they can be re-exported and thus qualify
for a duty refund. However, the duty refund process may take as long as six months. Thus
the high import duties not only increase the cost of watch but also increase the cost of
financing by blocking large amount of working capital.
 Transfer Pricing: The price at which the parent company transfers goods to its subsidiary or
vice-a-versa is called transfer pricing. International companies operating in India through a
wholly owned subsidiary face legal problems from the customs and the tax department
because of transfer pricing. If the customs department feel that the brand has declared a
low import price then it charges the company for under-invoicing and evading custom duty.
On the other hand, if tax department feel that the brand has declared a high import price, it
charges the company for over-invoicing and evading direct tax. For such companies, a large
percentage of their sales are spent on the legal consulting fee primarily because of these
issues.
 Value Cap on DEPB benefit: DEPB stands for Duty Entitlement Pass Book. It is a scheme
which is offered by the Indian government to encourage exports from the country. DEPB
neutralises the incidence of basic and special customs duty on import content of export

2010 Ver1 45
products. This is provided by way of grant of duty credit against the export product at
specified rates.
The Indian government has extended DEPB benefits of 7% of FOB value to the watch
category. However it has capped such benefits at ` 600 across all price segments. The watch
industry insists that the value cap should be done away with. The current maximum benefit
as per the value cap is just ` 42, irrespective of the price segment. Only finished watches are
under the purview of the DEPB scheme. Watch components have not been included under
the scheme. Because of this, India’s price and cost competitiveness in international watch
market is undermined and affects India’s position as a future hub for manufacturing.
 ‘Additional Focus Scheme’ under Foreign Policy: Watch is classified as high-technology
products under Foreign policy and fall under ‘Focus Product Category’ where it gets 2%
benefit in addition to FOB benefits. However watches have not been included under
Additional Focus Scheme group, which is entitled to an additional 2% benefit. (156 items
other than watches such as handicrafts, handloom, silk carpets, leather and leather
manufacturers, sports goods, toys and select bicycle parts have been classified under this
scheme)
 Parallel trade and smuggling: The high import duty structure has incentivised parallel trade
and smuggling. As much as 50% of the market is believed to be served by the grey market,
with the government earning nothing out of this market. Smuggling is a big market in the
case of premium and luxury watches. In the case of gold, as the duties on import of gold
decreases, the incidence of smuggling also decreased.
c. Counterfeiting
The Swiss watch industry estimates that 40 million counterfeit watches are produced globally.
70% come from Asia, mostly from China. The counterfeit watches not only hurt the companies
financially due to the potential sales loss but also cause considerable harm to the brand as the
market gets flooded with counterfeits. As a result the brand faces a dissonance from
unsuspecting customers. One can find fake watches across segments but luxury and premium
brands are the most popular. In India though, counterfeits is a major problem for the mass
market brands such as Titan, Timex & Maxima.
Counterfeiters usually focus on the appearance rather than the technical parts of a watch as it is
much easier to replicate and results in greater profits. Various forms of counterfeiting such as
illicit reproduction of a brand, a falsified country-of-origin mark, copy of a design, and spurious
hallmarks or a bogus classification are common.
There are two types of counterfeit watches

2010 Ver1 46
 The first group of counterfeit watch borrows the name of the prestigious watch brand.
However the design, functions and quality of the product in question is not comparable to
the original. These products are priced very low as compared to the original brand and are
therefore easily recognized.
 The second group of counterfeit watches resemble the original watch brand and are high
priced. Since, they are produced with good quality material; it becomes difficult for the
unsuspecting customer to identify a counterfeit product.
The quality of the counterfeit watches is sometimes so good that even a watch dealer or a
specialist in identifying counterfeit watches need special equipment to verify its authenticity.
Today, internet and new age distribution channels such as television and newspapers are used
to sell counterfeits. However one can also find such watches with local watch retailers &
unauthorized dealers.
d. Watches under Weights & Measures Act
Weights & Measures unit under the Ministry of Consumers Affairs promotes the use of correct
standards for weights and measures. The government has enacted various legislations such as
Standards of Weights & Measures Act, 1976; Standards of Weights & Measures (Enforcement)
Act, 1985; and Standards of Weights & Measures (Packaged Commodities) Rules, 1977 aimed to
ensure that consumers get the exact quantities of commodities with mandatory declarations of
relevant information on the package of the goods as well as to facilitate the use of standard
weighting and measuring instruments in trade and commerce activities.
Weights & Measures Act was constituted by Government on the foundation that it will be in the
interest of the consumer. Watches are classified as packaged products and therefore fall under
the jurisdiction of this Act. It entails watches to be sold in closed packages like mobiles; however
it should not be applicable to watches since only MRP printing is relevant for the category. This
Act is appropriate more for products where there can be loss of value if packaging not done,
however in case of watches
 There can be no loss of value without packaging
 Warranty card given has all details of who should be contacted in case of a fault etc.
 Watches are a touch and feel product and need to be displayed. It cannot be handed over to
customer sealed in a pack as in the case of mobile phones
 Packaging in watches is only crucial as it saves watches from getting damaged while
transportation

2010 Ver1 47
Watches are displayed out of their respective boxes for the purpose of sale. The box in which
watch is given to the customer adds no value to the product and contains no additional
components / accessory such as battery, charger as in the case of watches. Box is only provided
to the customer as a place to keep a product of significant value. Therefore watch industry is
contesting that watches should not be considered as a packaged commodity and should be
outside the purview of W&M Act. In the current state, the W&M Act has multiple implications
on the watch industry such as
 Taxation: As watches are covered under this Act, the category is being viewed under section
4A of the Central Excise Act. Under Section 4A, the tax on products is levied on MRP. If
watches are removed from the purview of this Act, the category will fall under Section 4 of
the CEA and the tax will be levied on the transacted value of the product thus lowering the
overall incidence of tax.
 Operational Difficulty: At any point of time a retailer has 100-200 pieces of watches. If the
law is followed, the retailer would not have the space to stock more than 12- 16 boxes
considering the limited space. And not abiding the law results in stock seizure, and fines in
case of an inspection. On the other hand keeping less SKU’s and making room for boxes is
also not feasible from business and consumer point of view as it would allow for display of
limited number of watches to make a choice from.
W&M requires certain information such as number of pieces, date of manufacture, customer
care number, etc to be printed on the bar code label for sale of watches .The watches are
required to be sold in the same box as supplied. Since there are more than 200 watches on
display, there are equal numbers of boxes in the storage. It becomes operationally difficult for
the salesman to identify the box and complete the sale. Besides, according to W&M, labels
should be printed, writing on the label is not allowed. Sticking another label on the existing one
is also not allowed. If the goods have not been sold as per the guidelines, it results in
confiscation of goods or penalty or both. As the box in which watch is given to the customer
adds no value to the product and is only provided to the customer as a place to keep a product,
the regulation to sell the product in the same box as packed should not be a criteria.
e. Customer Preferences for buying luxury product
 Indians prefer buying luxury products abroad – People do not find the shopping experience
in India comparable to the international shopping destinations in London, Milan, Paris or
Dubai. Many factors may have influenced such behaviour.
o Limited number of brands present in the country. This does not allow the customer the
choice provided at international shopping destinations.

2010 Ver1 48
o There are very few retail locations suitable for luxury brands in the country with only a
handful number of luxury malls.
o Customers perceive the products more costly in India as the government imposes high
import duties on watches
o Customers feel that the latest designs from international brands are only available in
stores abroad and may have to settle for older designs in Indian outlets.
o The stores in India do not offer complete product range.
 Unhealthy retail trade practices encouraging discount – Indian customers do not ask for
discount at international stores and are willing to pay full price for watches. The same
customer purchasing in India expects a discount. The retailers are drawn in the game of up-
man ship and provide higher discount to keep the customer. This practice has created a very
unhealthy competition in the domestic retail market. Few unethical retailers sell smuggled
products along with duty paid and make up for the lost margin. However it has made the
survival of the genuine & organised retailers difficult.
f. Retail
 Limited retail locations for retailing luxury in India –The ambience required to sell luxury
products in India is very limited. Until a few years ago, shops within 5 star hotels such as
Hilton towers and Taj Mahal, Mumbai were the only luxury destination. In the last few
years, UB City in Bangalore, DLF Emporio in Delhi, Palladium in Mumbai are few locations in
the country that have grown as the favourite destination for Luxury products.
 High Rentals – Retail rentals in India are on the higher side in proportion to the sales
potential of the locations. Since limited quality retail space is available for luxury retailers,
the rentals for such locations are much higher. Few international watch brands that had
opened exclusive watch boutiques had to shut down due to higher cost of retail space vis a
vis the comparatively lower demand for luxury watches.
 Lack of availability of Skilled Manpower for selling luxury products – At present, trained
manpower required to sell luxury products is not available in the country. Therefore luxury
brands are recruiting from industries like hospitality and telecom. They have to run
extensive training program and at times poach manpower from mature luxury markets like
the Middle East.
LVMH not only carries out extensive training & career planning for its front end staff but also
empowers them to grow with the organization. Seiko undertakes month-long training
program to groom new recruits on how to sell products and connect with consumers. Some

2010 Ver1 49
recruits are even sent to our global headquarters in Tokyo and other production hubs to
understand what the brand stands for.
 Retailers with large distribution not present – The retail market in India is at a nascent
stage. India has a few chains of department stores but these chains are not big enough
when compared to their international counterparts and do not provide a wide distribution
network. The present department stores in India do not deal in premium or luxury watches.
g. FDI in retail
FDI in retail is not permitted and therefore setting up a distribution channel is very difficult -
India has allowed FDI for cash and carry wholesale trading that involves B2B transactions. FDI in
retail sector is not allowed except for Single Brand Retailing. International watch brands have
entered India either through a joint venture or through a wholly owned subsidiary. In the case of
joint venture, the international company can invest up to 49% in the venture with the rest
invested by the Indian partner. If the company enters the country through a wholly owned
subsidiary, then it needs to get ‘Cash & Carry’ license from the government. This means that the
company can only operate in the wholesale market. It cannot open and operate retail stores.
Therefore it needs to rely on franchisees for expansion. This has limited the desired rate of
expansion for these companies as the appetite to bear loss in the gestation period for their joint
venture partners or their franchisees is low. Also stringent FDI regulations have resulted in
limited presence of international players in the market and fail to provide a boost to the growth.
Once FDI is allowed, one can expect international brands to establish more mono-brand outlets
in the country.

2010 Ver1 50
6. CASE STUDIES
a. International Timewear Industry
The Global Timewear Industry
World Watch Production, Exports and Imports in 2009
The world watch production in 2009 was 865 million units. There was decrease in production by
20% in relation to the year 2008.
World Watch Production by Type in 2009*
*JCWA (Japan Clock & Watch Association)
The effect of economic downturn was evident on the world time wear industry as well, 2009
was a difficult year for the industry. Companies faced the trend of decline in revenues and
diminishing employment opportunities. During the slowdown the mid range brands were not
affected much, quality watches in this segment were successful in attracting consumers.
Main exporting countries of watches in Main importing countries of watches in

2009 (in USD billion) (Direct exports) 2009 (in USD billion)

2010 Ver1 51
 Though Switzerland was the leading exporter of watch industry products in 2009 it
faced a decline in exports by more than 20% due to the economic slowdown. China
suffered no decline in terms of the number of wristwatches exported
 The destination of most watch industry products was Hong Kong, where total imports
were USD 5.1 billion in 2009, a significant proportion of which was re-exported.
Switzerland also proved to be a major consumer with imports totaling USD 2 billion
 Illustrating the general downturn in demand, all of these main markets registered two-
digit declines in watch imports in 2009, while in the United States the figure was almost
30%
Key Players in the World Timewear Industry
Swiss Timewear Industry
The Swiss timewear industry has a rich cultural heritage and has established itself in the world
as highest quality and precision watchmakers. Swiss watches have become synonymous with
‘fine watches’. The competitive edge of “Swiss Made” watches has been an impression of class,
style and luxury by virtue of which they enjoy a good reputation and command higher prices.
One of the great strengths of the Swiss watch and clock industry, by comparison with its foreign
competitors, is its ability to offer the consumer a genuinely comprehensive choice of products,
in terms of technology, materials used or designs.
History of Swiss watch making
Swiss watch making dates as old as 1540s. The Swiss have always been good at adapting new
methods of watch making mostly learnt by their competitors and bettering them with time. In
1920s the Swiss broke the monopoly of American watch makers and became the early adopters
of wrist watches. They not only adapted well to the American way of mass production but by
the 1950s, the Swiss had perfected machine made complicated wrist watches such as
chronographs, automatic winding watches, and day-date watches. One big factor that made this
possible was the fact that the Swiss market had many different companies involved in making a
watch, each doing only a part of the manufacture. On the whole the Swiss were thus able to
produce everything from very cheap watches, to watches of the highest quality. In 1970s the
Swiss similarly well adapted to the Japanese quartz technology and adopted it successfully in
their stylized fashion and luxury watch segments.
Challenges faced by Swiss watch industry today
 With the ever increasing labor costs in the west, even the most sophisticated manufacturing
industries are migrating to countries where labor is less expensive and so is the case with

2010 Ver1 52
luxury watch manufacturing. Hence many Swiss brands have also outsourced the
component manufacturing to Asian countries like China and Japan
 The other main challenge that Swiss watches face are of counterfeits in almost all markets in
the world where they have presence. It is estimated that counterfeits account for more than
6% of Swiss watch exports every year.
 The recent economic slowdown resulted in a decline in Swiss exports to the world. Swiss
watch manufacturers exported goods worth 13.2 billion francs in 2009. This level is below
that recorded in 2006. The annual decline compared to 2008 was -22.3%, i.e. a deficit of 3.8
billion francs. Finished watches made up the bulk of Swiss watch industry exports. Their
value was 12.3 billion francs in 2009, a fall identical to the average for the sector, i.e. -22.3%.
The trend is however showing signs of recovery and the number of watches exported returned
to growth at the very end of the year.
Swiss watch market in India
Swiss watch exports to India were ~USD 35.6 million in 2009. India is still seen as a small market
for Swiss watches, in 2009 sales grew at an annualized rate of 25% valued at around USD 250
million. Analysts expect the Indian market to grow into a USD 1 billion market over the next 10
years.
US Timewear Industry
History
The American time wear industry was founded as early as 1850s. It was famous for its ‘American
system’ of mass production. However, unlike the Swiss market the American market was mostly
dominated by 2 large players Waltham and Elgin. They had factories which made everything
from components of a watch to selling the watch and promoting them. Sole reliance on in house
2010 Ver1 53
manufacturing combined with over expansion, lost of reserves during the World War and high
costs of specialized machinery played a great role in the decline of the American watch industry.
One of the players that were able to survive was Timex which manufactured trendy, stylized,
durable yet cheap and affordable watches that were targeted at the masses unlike the Swiss
watches. Timex streamlined the watch making process which made it more scalable. Its designs
were simple; alloy bearings were used in movements along with precision tooling which made
the processes highly automated and hence decreased the production costs further.
Today US is one of the largest markets in the world for watches however they are mostly
manufactured overseas in Asian countries. Over the past few years US market has seen more
and more brand recognition especially of high end watches and this has resulted in increased
business volumes.
A great volume of imported watches come from Swiss market into US. There is a huge demand
for watches that are exclusive and rare, limited edition watches are a great hit in this market
which is marked by a need for uniqueness. High end mechanical and jewelry studded watches
are also a rising trend here. However even the most renowned names in American watches like
Elgin, Waltham and Hamilton are not made in US.
Today some of the big brand names in the US market are Timex, Bulova, Swatch, Fossil and
Movado.
Japanese Timewear Industry
History
In the 1920s, Japanese started the manufacturing of wrist watches which then became more
than just s necessity device to a lifestyle accessory and it is still the same case world over. The
industrial revolution of the 1960s changed the dynamics of Japanese watch market lending it the
much needed credibility and faith. The Japanese watch industry has had great support from the
government that established a private sector institute which constantly worked on the
improvement of domestic watches.
Key reasons why the Japanese time wear industry is unique
 Japanese watch industry is known for its processes, systems, manufacturing technologies,
and quality control
 Japanese continuously do research and development which helps them to introduce

innovative watch models in the market. Japanese watches are high on quality and features
while their prices are much more affordable than their Swiss counterparts. They overtook
the Swiss competitive edge of Style and Luxury by offering sleek quartz watches ensuring
2010 Ver1 54
durability, quality, with attractive design element at affordable prices. Today Consumers
world over, especially children and youth, prefer Japanese watches for their modern
features and innovative designs
 The players in the Japanese watch market have learnt to create a level playing field where
every player has a different set of target segment, thereby covering the entire spectrum of
consumer demographics through its brands
 Japan has the uniqueness of being a large manufacturing hub for watches along with an
equally large consumption demand for watches.
 Seiko, Citizen and Casio are some of the big players in the market
Chinese Timewear Industry
China is currently the third largest consumer of luxury goods, and will rank first by 2015. The
Chinese watch market is growing at around 35-40% year on year. Consumption wise China is a
big market for Swiss luxury watches, more so with the increasing numbers of rich consumers in
China and their constant need to upgrade aspirations and lifestyles. Multiple ownership of
watches is also increasing as consumers like to wear different watches for different occasions
and day to day activities. In the last few years the Swiss watch exports to China have increased
fourfold. It is a country that has grown 10 times in a span of 7-8 years by reduction of duties,
simplification of operating procedures etc. The Chinese government has played a big role in the
country’s industrial development.
Manufacturing capabilities and challenges of Chinese timewear industry
 China is one of the largest manufacturing hubs for watches and is a great power in
production and consumption of watches.
 Having mastered the manufacturing techniques the Chinese market is today producing
watches across all segments including high end watches.
 Low production costs and skilled manpower are the key success factors for the Chinese
watch manufacturing industry.
 Large volumes of business from other countries in the world further help them in lowering
their costs.
 The watch industry in China has formed a clustered development. Six major producing areas
are Pearl River Delta in Guangdong, Fujian, Zhejiang, Jiangsu, Shandong and Tianjin.

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 However the Chinese watch industry is not devoid of challenges, apart from rising costs in
China for manufacturing watches, the international market still depends largely on the
‘Made in Swiss’ mark on luxury watches.
 The Chinese industry is still largely perceived to lag behind in technological advancement,
superior quality and skilled craftsmanship that are desired in high end watches. The Swiss
have a technology leadership and brand advantage over the Chinese.
Thailand Timewear Industry
Thailand has become the manufacturing base for many European watch makers, especially Swiss
watch and clock manufacturers. Skilled labor and low production costs are the USP of Thailand’s
watch manufacturing industry. The industrial estates around Bangkok have emerged as
manufacturing hubs for European watch brands.
Timewear Industry in other BRIC nations
Brazil Timewear Industry
Brazil is one of the world's fastest growing major economies. Brazil has a population of more
than 200 million most of it in the relatively young age brackets. It has a growing affluent
population of more than 20 million residing mostly around Rio. Despite this luxury brands are
finding difficult to gain a foothold there mainly due to the government intervention in regards to
import regulations and restrictions. Most of the demand is met by brands like Rolex, Omega,
TAG Heuer and Cartier. Once the trade opens up in Brazil it is sure to prove its potential in the
worldwide watch market.
Russian Timewear Industry
Russia presents many opportunities for watch brands especially in the luxury segment. The
affluent class in Russia has a flair for luxury automobiles, clothing etc. The key challenge in this
market is underdeveloped distribution network, mostly due to the import restrictions. Few
brands like Longines and Rado have a specially adapted pricing policy for this market and have
been able to set up distribution networks and channelize sales here.
Key learning for the Indian timewear industry
The Indian timewear industry has a lot to learn from the timewear industries in some of the
developed and developing nations. Be it China’s manufacturing capabilities, Japan’s
technological excellence or effective marketing by US and European countries. Some of the key
insights on how these nations have succeeded in creating a niche in the global timewear market
are as below:

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 Government support for the watch industry
o Providing infrastructure, formulating systematic and industry friendly policies for

taxation and duty structure
o Chinese and Japanese governments have helped the industries there by taking and
implementing fast decisions regarding policies and regulations
 Reduction of duties
o Internationally the duty structure is more rationalized which is benefitting all stake
holders in the timewear industry value chain
 Achieving manufacturing excellence
o Internationally countries operate on a low cost framework including cheap labor and
less infrastructure cost
o This enables them to have start to finish operational excellence be it component

manufacturing or assembling and gives them the ability to furnish large volumes of
orders
o Chinese manufacturing companies use specialized machinery which are regularly

upgraded to cater to all needs
o In China there is increased focus on the vocational skills to build trained manpower for
the watch manufacturing
o Taiwan and China provide huge employment opportunities to women workforce. Most
of them are employed in precision manufacturing
 Increased focus on marketing of this industry
o A lot of marketing is done to create awareness about the industry and brands especially
in Japan and US to increase domestic consumption
o One of the key reasons why Japanese and US industry score over Swiss is they have
large domestic market, while Swiss market is mostly dependent on exports
o Internationally penetration and multiple watch ownership is very high owing to the
effective marketing techniques
 Increased focus on quality retail in watch industry

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o China and Hong Kong focus a lot on quality retailing of watches especially in the luxury
and prestige segment
o Watch retail stores in China, Japan and Hong Kong are large, carry a lot more variety and
match international standards of look, feel and ambience
o Hong Kong has a number of high streets that serve as ideal locations for high end watch
retail stores
o China market has new store openings on daily basis across various formats like
boutiques, shop-in-shops, kiosks etc.
o Internationally big jewelers and large department stores are more profitable channels
for watch industry, but in developing countries EBOs have proved to be better for
building the brand and presenting it in front of consumers
o Internationally retailer margins are very high, in the range of 40%. This helps them in
constantly improving the quality standards at retail stores
 Thrust on technological advancement
o Japanese market thrives on increased use of new technology and user friendly feature
additions in watches. This is constantly done to provide value to the consumer and
enhance multiple ownership
International Time wear Industry Trends
The International Time wear industry has seen a lot of new trends this year. Prominent amongst
those are the following:
 Trend towards in-house movements manufacturing
o As movements become hard to get companies throughout the industry are turning to
alternative sources, and one of these sources is to do it themselves
o However a big challenge here is of continuous expensive investment in research and

development
 Emphasis on Affordable luxury
o There is a greater emphasis on affordable luxury. Many elite brands have specially
created offerings in the affordable luxury segment
 Opening brand boutiques to enhance brand experience

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There is a gradual shift, largely amongst luxury brands towards opening more exclusive
brand boutiques. Watch boutiques are gradually spreading around the world and are
making their presence felt in hotspots like Geneva, Paris, London, Las Vegas, New York,
Beverly Hills, Tokyo and Shanghai. Hublot has 24 boutiques around the world, de
Grisogono has 13, Patek Philippe has 3 and the numbers are increasing by the day.
Boutiques are helping the brands in two key aspects;
 Capture and Retain Customer Loyalty: As its getting tough to get and keep
consumers, brands are going the extra mile to capture and retain their loyalty.
Brands are relying less these days on the consumer information that retailers or
authorized dealers pass on to them and hence this move to open exclusive
boutiques wherein they can directly communicate with the consumer and gain more
control
 Showcase Range and Retailing Experience: Today’s well travelled and brand
conscious consumers have great expectations from the retail space where they are
buying their timewear from and so watch brands are more concerned on providing
these consumers with a holistic experience, hence they are systematically reducing
their network of authorized dealers and concentrating on opening exclusive brand
outlets. These boutiques carry large variety of various models of the brand so that
the customers have more choice. There is emphasis on customer service,
personalization and after sales support thereby enhancing the customer shopping
experience

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b. Other Indian Sectors
i. Growth of Mobiles as a lifestyle industry in India
The Indian telecommunications industry is the world's fastest growing telecommunications

industry, with ~671.70 million telephone (landlines and mobile) subscribers and ~635.50 million
mobile phone connections as of June 2010.
Mobile phones today have become an indispensable part of every one’s life. The market has
witnessed tremendous growth since the mid 90’s when it was first introduced in India. The
Indian Mobile subscriber base has increased in size by a factor of more than one-hundred since
2001 when the number of subscribers in the country was approximately 5 million. India also has
the second largest telecommunication network in the world in terms of number of wireless
connections after China.
Key growth drivers for the Indian telecom industry
Some of the important factors that have fueled the growth of this sector making India the
fastest-growing telecom market in the world are
 Large population base
 Low penetration levels of telephones
 Rise in consumers' income and spending power owing to strong economic growth
 Feature rich, innovative yet inexpensive handsets
 Affordable monthly rentals
 Change of consumer mindset towards mobile handsets as lifestyle accessories
The Mobile handset industry in India
 The mobile handset industry in India has seen tremendous growth over the past few years
 India’s mobile handset market touched 100.9 million units in the year ended June 2009,
recording a growth of 6.7% from 94.6 million units in the previous year ended June 2008
 The Indian mobile handset market is currently estimated to be USD 6.3 billion

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 The market leader is Nokia with around 52 percent market share. Motorola, Samsung, Sony
and LG are the other main brands in the market
 ‘Made in India’ is also the new ‘mantra’ in the Indian handset industry. Today India is set to
become a large base for mobile handset manufacturing in the world.
 Handset manufacturing industry in India is expected to be over USD 7 billion in turnover by

2010, growing at 35 percent year on year
 Indian phone makers together have captured around 14 percent of the market share. The
share of Indian brands is growing at 5 to 7 % every year
 Despite few challenges like poor infrastructure, a complex tax system and merger
regulations that make it difficult for foreign companies to enter Indian market, the market
space for mobile handsets sees the entry of new players every year.
 Many of these local brands are cheap imitations of existing branded phones making them
low cost and even more affordable to the young working population and college students
for whom mobile phones are fashion accessories that need to be changed often.
Transition of mobile phones as lifestyle accessories
The transition of mobile phones from device/instruments to lifestyle accessories has been slow
and gradual. Changing consumer preferences have helped transform need based products like
phones and watches into lifestyle accessories.
 With time there has been an increase in disposable incomes of consumers and they are
spending more on products to suit their lifestyle needs
 Majority of today’s youth is working and independent so they spend a lot of time and
money on making a style statement through accessories like mobile phones and watches
 In the era of social networking, the mobile phones have gone far ahead from their sole role
of being a means of communication
 Mobile phones give users give them an escape route from their busy corporate lives a
means of entertainment, a platform to express thoughts, chat and share interests
 The increased consumer inclination towards using value added services like dual sim, 3G,
GPS, Wi-Fi, wireless TV, mobile gaming, mobile music, mobile banking etc. has transformed
the mobile phone as a lifestyle accessory
 Today mobile phones and watches are all well coordinated with the kind of clothes one
wears or bags one carries. Consumer see them as an extension to their personality
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Evolution of handsets to accommodate the changed preferences of its users
 Handsets have become sophisticated with the incorporation of many innovative features
and trendy looks
 Consumers today can get fm radio, mp3 player, camera and even a torch light all in one
 Handsets are even categorized based on features, like music phones, smart phones,
navigator phones, business phones, high mega pixel camera phones, gaming phones, social
networking & messenger services based phones etc.
 Blackberry, Android, iPhone have evolved as smart phones, feature rich devices that further
aid the ‘on the go’ consumer
 Handsets can be easily customized as per the user in terms of shape, size and color. Well
coordinated handset panels & accessories are available in the market to attract fashion
conscious consumers
 Wide screen, touch pads and large easy to use keypads have been introduced to increase
the attractiveness for this product category
 Many handsets have been introduced that are embellished with costume jewelry
Mobile phones in rural India
Mobile phone usage is rising faster in rural India where around 70% of Indian population resides.
Mobile phones have even made inroads in areas where people do not have access to regular
landline network. Players like Nokia are doing tremendous marketing efforts to make rural
consumers aware of the use and features of mobile phones. Handset manufacturers are
introducing new products that are specifically targeted at rural markets. Ultra low cost mobile
phones are being introduced specially for these markets. Mobile phones with long lasting
batteries and torch lights have found a very large consumer base in rural areas. Thus, giving rural
consumer a range of choices suited best to their needs and lifestyle.
Future outlook for the mobile phone industry in India
Retailers are also entering the market with their private label handsets. However, this intense
competition is again turning the tide in favor of consumers who have so many options of
reasonable quality at very low and affordable prices.
It is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore,
projections indicate that the total number of subscribers in India will exceed the total subscriber

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count in the China by 2013. The industry is expected to reach a size of USD 74.85 billion by 2012
at a growth rate of over 26 per cent.
Conclusion
Mobile phones have become so much more than just a means of communication, more so with
the advent of 3G technology, continuous innovations in handsets and feature additions in
mobile phones this trend is all the more likely to grow in near future. Mobile phones have
successfully evolved into attaching themselves to the aspiration values of consumers.

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ii. Duty reduction in other Indian industries and its effect
The duty structure in India has been a major road block for the sale of high price watches.
It penalizes the large companies which operate by the rule book at the cost of grey market
dealers who do not adhere to the duty structure.
In the past duty reduction in many other industries in India has had a positive effect on their
growth. A case in point is the reduction of import duties on gold, which has evolved the industry
into one with a uniform and transparent import structure, which benefits legitimate customers
and business houses, besides increasing government revenues.
Here is a look at how the gems and jewellery, auto and mobile phone industry has gained from
duty and taxation reforms.
The Gems & Jewellery Industry
A leading foreign exchange earner for the country, gems and jewellery sector is growing at an
annual rate of 15 per cent and accounts for nearly 20 per cent of the total Indian exports. The
sector is very labour intensive and provides employment to over 1.3 million people, directly or
indirectly.
Source: Gem & Jewellery Export Promotion Council
Data for 2002-2007 corresponds to calendar year
Data for 2008 and 2009 correspond to FY April to March
Indian jewellery market has two major segments, gold jewellery that constitutes nearly 80 per
cent of the market and diamonds that includes fabricated studded jewellery forming the rest. Of
the gold jewellery manufactured in India, domestic market constitutes a lion’s share. However,

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India exports a major portion of the rough, uncut diamonds processed, either in the form of
polished diamonds or finished diamond jewellery. India is not only the largest consumer of gold
worldwide, but is also the leading diamond cutting nation.
India’s gems and jewellery industry is dominated by family owned businesses who have a 96%
share of the total players and is highly unorganized and fragmented. The Indian gold processing
industry alone has around 15,000 players.
Some of the steps taken by the government over the years to make Gems and Jewellery industry
competitive in the international market are given below.
 The abolition of the Gold Control Act in 1992 that allowed large export houses to import
gold freely. Exporters in export processing zones were allowed to sell 10 percent of their
produce in the domestic market.
 In 1993, gold and diamond mining were opened up for private investors and foreign
investors were allowed to own half the equity in mining ventures.
 In 1997, overseas banks and bullion suppliers were also allowed to import gold into India.
These measures led to the entry of foreign players like DeBeers, Tiffany and Cartiers into the
Indian market.
 In 2004-05 the government lowered import duty on platinum from US$ 13.82 per 10 gm to
US$ 5.03 and exempted rough coloured precious gems stones from customs duty at the first
stage itself, instead of claiming reimbursements later.
 Rough, semi-precious stones were exempted, a move aimed at further promoting the
exports of studded jewellery and platinum jewellery.
 Government set up SEZs and gems and jewellery parks to promote investment in the sector
 In 2007, the government abolished import duty on polished diamonds.
 Cutting and polishing of gems and jewellery treated as manufacturing for the purposes of
exemption under Section 10A of the Income Tax Act.
 Re-import of Diamonds & Jewellery (either in complete or partial lot) exported on

consignment basis have been allowed.
 Duty free import entitlement of tools, machinery & equipment has been allowed.
 Surat home to thousands of diamond units with lakhs of diamond workers has been
recognized as "Town of Export Excellence".

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Foreign Trade Policy (2009-2014) Initiatives
 Import of gold of 8k and above is allowed under replenishment scheme subject to import
being accompanied by an Assay Certificate specifying purity, weight and alloy content.
o Duty Free Import Entitlement [based on Free On Board (FOB) value of exports during
previous financial year] of consumables and tools, for jewellery made out of precious
metals (other than gold & platinum) - 2%, gold and platinum - 1%, rhodium finished
silver - 3% & cut and polished diamonds - 1%
o Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of
exports.
o Extension in number of days for re-import of unsold items in case of participation in an

exhibition in USA increased to 90 days.
o In an endeavour to make India an international trading hub for diamond, it is planned to

establish "Diamond Bourse (s)".
Mobile Phones
According to Indian Cellular Association (ICA), the production of mobile phones in India was 100
million in 2009 and had grown from just 31 million units in 2006. The industry projects a yearly
production of 250 million units by 2012 with a large portion (~100 million units) of this for the
export market. The growth in production will be driven mainly by the expanding mobile
subscriber base in India and favourable government policies promoting local electronics
manufacturing in India.
The customs duty was first lowered followed by a cut in the excise duty in 2001-02. This enabled
the organised sector to offer mobile products to the consumers at the same prices as that of the
grey market. The grey market then constituted nearly 90% of the total market and was
subsequently eradicated. With the consumption attaining global scales, several global leaders
and EMS companies invested in mobile and related equipment manufacturing in the country.
Most of the investments in the manufacturing value chain are currently concentrated towards
assembly operations.
In 2010, the government extended full exemption from basic customs duty and CVD available
for parts, accessories for manufacturing of mobile handsets to parts for manufacture of battery
chargers and hand free headphones. This is yet another step by the government to make India a
global manufacturing hub for mobile phones. Mobile phone companies have responded

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positively to the government policy and are pushing through indigenization effort by bringing
global component vendors to set shop in the country.
Automobile & Automobile Component
The Automotive Component Manufacturers Association of India (ACMA) estimates the size of
the auto component industry at around US$ 19.2 billion in 2009-10 growing at a compounded
annual growth rate (CAGR) of 19.2 per cent. In 2009-10, the industry exported auto components
worth US$ 3.2 billion. Engine parts (31%), Drive transmission and steering parts (19%),
Suspension & braking parts (12%), Body & chassis (12%), Equipments (10%) and Electrical parts
(9%) form the major auto component categories.
The automobile and the automobile component industry have received a lot of impetus from
the government following the liberalization of the economy. The government has decreased
excise rates for automobiles in all categories over the years. The chart below illustrates decline
in tariff rates in auto-components and the rapid growth of production in this sector. When the
government was looking to open the economy by making it easy for the automobile companies
to import, many had feared that this could harm the sector. However domestic consumption of
the automobile sector has also been growing driven by drop in prices. This has been made
possible due to customs and excise cuts in auto components and in automobiles. Other factors
such as rapid income growth and the improvement in infrastructure have also resulted in
demand expansion.
Custom Duties and their Impact on Production of
Auto Components Industry

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8. RECOMMENDATIONS OF THE REPORT
The AIFHI has a number of recommendations to the Government of India which if implemented
can help in the growth of the Indian time wear market
a. Reduction and Rationalization of duties and taxes
High duties along with multiple & varied taxes are one of the key impediments to the growth of
watch industry in India.
It has encouraged evasion of duties and resulted in ever growing grey market. Brands have not
been able to get significant volumes because of this and therefore many of them are facing
difficulties in turning profitable.
Globally there is miniscule duty on all products including watches but in India there are high
duties imposed which further discourages consumers from buying luxury brands in India and they
instead prefer to spend on travel and shop for them abroad.
There is a strong need for the duties and taxation structure to be reduced, rationalized and
simplified so that all the stakeholders in the watch industry namely, brands, manufacturers,
retailers and consumers benefit from the same.
The key recommendations in this regard are
Duties
 Duties need to be lowered as it would help curb the grey market where government is losing
due to tax and duty evasion. It would also translate into higher margins for retailers which
would help them in raising the quality standards at their retail outlets. Consumers would also
benefit from the wider range, better staff quality, store ambience and more discounts offered
by the retailers
 Duties on luxury watches with high price jewellery items in it should be low, at par with that on
branded jewellery
 The countervailing duty (CVD) should be levied on FOB/CIF prices and not on MRP, as is the
case with other industry sectors
 Abatement should be increased to around 45%, as the sales and distribution cost alone is 30-
35% of MRP and not just 17% of assessable value, as is the perception

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 Credit should be provided on duty payments as a large amount of money is blocked in the
same
 Duties should be lowered at par with other industry sectors like auto and mobile phones
i. Auto sector: Duties were reduced for auto sector in every budget from 1991 onwards.
International players were encouraged by giving them SOPs. A refund was issued on
excise duty on registered vehicles which in turn encouraged people to buy more vehicles
ii. Mobile phone industry: Duties were drastically reduced to as low as 4-5%. This would
help in making the mass and mid segment of watches more affordable for consumers
Taxation
 Value based taxes should be levied instead of the current practice of a fixed percentage
based taxation which is same for all watches irrespective of their prices of the watch.
Watches in lower price segment (` 500-750) should be made free from any excise. This would
not only make these watches more affordable for consumers but will eliminate the
malpractices & reduce the size of grey market which is most prevalent in such low price
segments
 Rationalization of tax slabs is required, as including watches in the highest tax slab conveys a
negative perception amongst stakeholders that the government is not keen on promoting this
industry
 Excise should be calculated on manufacturing cost and not on MRP
b. Faster implementation of GST
GST implementation would simplify the taxation structure and is essential for addressing a
number of issues that are impediments to the growth of Indian watch industry. A GST would have
several beneficial effects, including:
 Uniform taxation - the rate of taxation would be the same across all geographic boundaries of
India and thus would eliminate the opportunity for arbitration as well as provide goods at a
uniform rate everywhere in India
 Simplified taxation - calculating a GST at a uniform rate would be much easier and it would
make adherence to the proposed tax simple

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 Single point taxation - rather than a multiplicity of authorities to deal with, a single-point
taxation could be dealt with through a single-point window thus creating greater efficiency and
speed of operation within the system
 Solve issues related to holding regional warehouses - GST would do away with the need for
regional warehousing, thus freeing up greater margins to be either distributed to retailers,
watch companies or consumers
 Reduce inventory in transit - the amount of inventory held in transit is considerable at present
due to the multiple check-points and authorities involved in the tax and clearance processes.
GST would reduce the amount of inventory in transit, creating greater operational efficiencies
and reducing working capital needs for watch companies
 Increase penetration of watches - the price of watches products would fall if the overall tax
rate is reduced to 16% GST as proposed. This would expand consumption base and also
enable current consumers to consume more of the goods they need and want, thus improving
the lifestyle of people.
c. Non inclusion of watches in the Weights and Measures act
Classification of watches should not be done as packaged goods and watches should not be
under the jurisdiction of Weights and Measures act. The act results in unnecessary complications
and non compliance results in stock seizures and fines in case of inspection. Non inclusion of
watches from this act would help reduce taxation and operational difficulties to a great extent;
 Taxation: If watches are removed from the purview of this Act, the category will fall under
Section 4 of the CEA and the tax will be levied on the transacted value of the product thus
lowering the overall incidence of tax
 Operational Difficulty: Retailers would not have to face difficulty in stocking multiple watch
boxes in the limited store space. No time would be wasted in ensuring that the right box
corresponding to the watch bought is given to the customer
d. Allow FDI in single brand retail
Currently many international brands are not entering the Indian market because of the FDI
restrictions and the complexities of franchisee and joint venture arrangements. Opening up of FDI
in single brand retail would help the watch industry grow in many ways;
 It will open up the market and will bring many international players to the market
 Fresh money inflow in the market shall lead to better distribution and marketing of brands

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 This shall further lead to opening of job opportunities in the sector
 Organized retail in watch industry will evolve further as international quality mono brand
boutiques open up
 Mono brand stores would bring alive the ethos of the brand to the consumers
 It would help in maintain uniformity of look and feel of a brand’s retail store across the globe,
which the new age consumer expects of an international brand
 It would give the consumer more variety to chose from
 It would also help establish quality standards of luxury retailing in India
e. Assistance in distribution reach
The penetration of watches in rural sector and smaller towns/districts is very low, as setting up a
distribution network there is an expensive task. A well established government network can be of
great assistance here. Government can help the industry by lending its vast post office/bank
network in rural areas and smaller towns/districts to industry players for setting up kiosks for
selling watches in these areas
f. Assistance in reviving the manufacturing capabilities
India is one of the few countries besides Switzerland, Japan US, Taiwan & China to have watch
manufacturing capabilities. India has a large domestic market, abundance of skilled labour and a
history in watch making to its advantage. Currently with no hubs for mid price segment watch
manufacturing and rising costs in other Asian countries India has great opportunities in the watch
and components manufacturing sector. Government can encourage the watch manufacturing
sector in India in many ways;
 Support with infrastructure for developing manufacturing hubs and units in smaller towns
 Current manufacturing facilities in Rajkot, Hosur etc. could also be developed as export hubs
 Remove or lower the restrictions on import of machinery for watch manufacturing
 Duty on raw material import currently stands at 16% and excise at 10.3% bringing the overall
tax liability to around 28-30%. Any reduction in the same will be good for the industry
 Schemes similar to ‘Technology Up gradation Fund Scheme’ should be implemented to give

a boost to the industry
g. Other recommendations

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 Horology should be promoted and developed as a science and encourage more R&D in the
sector. There is need for horology to be glorified as a subject like auto engineering as the
industry lacks learned mechanics and experts on watches
 The DEPB value cap should be done away with and DEPB credit rates relating to export of
Quartz Analogue Watches should be enhanced
Recommendations to industry
 Increased spend on marketing and promotion: There is a need to generate more awareness
amongst consumers. Players in the watch industry need to take initiative and create
awareness about the watch market. It is not only required to graduate the industry from a
watch business to brand business but it will also help in increasing penetration, multiple
ownership
 Focus on better retail outlets: Industry should work towards opening quality retail outlets
where consumers get a large variety of products, good service levels and assistance from
knowledgeable well trained sales staff
 Need to make inroads in rural markets: Companies should create awareness amongst rural
consumers. Products need to be specially designed keeping in mind the lifestyle of rural
consumers. Pricing needs to be made affordable too
Conclusion
Indian government should do away with their protectionist policies and create a level playing
field amongst all players in the industry. Efforts should be made to remove the various factors
that are impediments to the growth of the industry so that the Indian timewear industry can
mature and be at par with other countries.

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ANNEXURE
1. Abatement Rules
Abatement as it Abatement as it Abatement as it
is with current should be with should be with
assumptions current revised
assumptions assumptions
MRP 100 100 100
Taxes - Central Excise
1 Basic Duty 7% 7.00 7% 7.00 7% 7.00
2 Additional Excise Duty (AED)
3 Special Excise Duty (SED)
4 NCCD
5 Additional Duty
6 Education Cess 2% 0.14 2% 0.14 2% 0.14
7 Higher Secondary Education 1% 0.07 1% 0.07 1% 0.07
Cess
Total 7.21 7.21 7.21

Post Removal Expenses
1 Octroi / Entry Tax / 0.25% 0.25 0.25% 0.25 0.25% 0.25
Transport / Insurance etc.
2 CST 1% 1.00 1% 1.00 1% 1.00
3 Trade (Dealer) Discount 17% 17.00 17% 17.00 25% 25.00
Total 18.25 18.25 26.25

VAT 13% 13.00 13% 13.00 13% 13.00

MRP 38.46 38.46 46.46

Abatement 30% 38% 46%
Education Cess: Charged on BED + NCCD + AD

Higher Secondary Education Cess: Charged on BED + NCCD + AD
Octroi / Entry Tax / Transport / Insurance etc.: Charged on the sum of (AV) and (Total Taxes - Central
Excise).
CST: Charged on the sum of (AV) and (Total Taxes - Central Excise).
Trade (Dealer Discount): Provided in terms of the MRP
VAT: Charged on MRP
MRP: Equal to sum of (AV), (Total Taxes - Central Excise), (Post Removal Expenses) and (VAT)
2. Key players & their future plans
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Casio India Co. Pvt. Ltd. (Cic)
Major Brands – Casio
Casio has 270 point of sale across 73 cities in India. It is sold through franchisee owned and
operated Exclusive Brand Outlets (Casio), Large Format Stores, and other multi brand watch
outlets. Their focus in the future is to grow through large format stores and multi-brand outlets.
It also plans to consolidate its dealership network across 30-40 Class A cities in the country.
Number of Retail Stores by Formats Current Future (3-5 years)

Shop in Shops (Large 32 NA
format stores)
Multi Brand Outlets 233 NA
(dealers)
Casio (EBO & Kiosks) 5 NA
Citizen India Private Limited
Major Brands – Citizen
It has a distribution network of around 500 outlets all over the country. It operates through
Exclusive Brand outlets owned or operated by the franchisee, Large Format Stores, and other
multi brand watch outlets
The company is focussed to open new EBO on premium, high street locations. It also looks to
increase Citizen Corners in malls and other channels where there is a multi brand presence.
Citizen is looking at increasing sales in India not in terms of volume but in terms of value. Citizen
wants to tap into the large and increasing number of rich in India. With increasing average
disposable income, higher brand aspirations Citizen hopes to increase its business through
increased sales of higher value watches. In India, out of 120,000 pieces sold by Citizen, 25,000 to
30,000 are Eco-Drive watches. This year it expects a 25 per cent increase in sales of Eco-Drive
watches in India. In India, their aim is to increase share of Eco-Drive by 50 % in quantity and 80%
in value.

First Citizen 41 NA
Citizen Corners (MBO) & 500 NA
Large format stores
Egana India Private Limited

2010 Ver1 74
Major Brands - Esprit, Pierre Cardin, Carrera, Puma, Cerrutti, Antonio Bernini
It has point of sales across 40 cities with more than 250 doors. It retails through Watches &
More (Own multi-brand retail outlet), other multi-brand outlets, and Large Format Stores. Egana
India plans to open 50 stores by the end of 2010and 100 by end of 2011.

Watches & More 13 50 (2010)
100 (2011)
Shop in Shops & MBO 250 NA
Fossil India Private Limited
Major Brands - Diesel, DKNY, Fossil, Armani, Burberry, Oyzterbay, Zodiac
Fossil has 280 point of sale mostly across Tier 1 towns. It is mainly sold through Large Format
Stores, and other multi brand watch outlets. It plans to increase its point of sale count from 280
to 350 by 2011

Shop in Shops & MBO 280 350
Gitanjali Lifestyle (Morellato India Private Limited)
Major Brands - Morellato, Chronotech, Just Cavalli, Miss Sixty, Everlast, Sector, Roberto Cavalli,
Pirelli Pzero Tempo, Marvin, Philip, Nina Ricci
It operates from around 250 shop-in-shops in the country. It has introduced its own multi brand
watch outlet - Bezel. It also operates through Large Format Stores and other multi-brand watch
outlets. Gitanjali Lifestyle plans to open 40-50 Bezel stores by next three years.
It has multiple brands but is currently concentrating on building equity for Morellato and
Chronotech. It will concentrate on other brands once these brands are of a decent size. The
company is also looking at getting more brands into India.

Bezel 1 40-50
Shop in Shops & Multi 250
Brand Stores

2010 Ver1 75
HMT Watches
Major Brands – HMT
It has 23 Brand Showrooms. Besides this, it has regional offices that look after sales. HMT has
been losing market share for a long time and has been making loses. As part of its revival plan it
expects to increase both turnover and market shares in its businesses by implementing various
strategies given below:-
 Rationalization of man power through VRS
 Reduction in inventory
 Increasing the volume in Production and Sale of high-end watches
 Strengthening marketing network by appointment of Territory Dealers
 Adoption of innovative and aggressive marketing policies
 Focusing on cost reduction
 Focus on institutional Sales & Sale through Canteen Stores Department (CSD)
 Thrust on introduction of New Models to enhance the marketability of watches
 Emphasis on Non-watch operations for additional revenue generation.
 It is in talks for possible tie-ups with IT choupal, Post office, other government organisation
etc
 Looking to partner brands or enter into JV to offer hi-technology multi-functional watches
 May outsource or appoint firms for developing designs
 Also looking to focus on the youth and ladies watches in the future
 It is also open to manufacture components and watches for other companies
LVMH watches & Jewellery India Private Limited
Major Brands - De Beers, Christian Dior, Hublot, Tag Heuer, Zenith
Currently LVMH products are available in 75 MBO and 5 EBO’s across 27 cities in India. It
operates through franchisee owned and operated outlets Exclusive Brand Outlets (Tag Heuer &
Dior), Large Format Stores and Premium Multi-brand watch outlets.

2010 Ver1 76
LVMH plans to expand to 150 point of sale for Tag Heuer and 34 for Dior. *It plans to open
around 14 mono- brand stores once FDI opens up in the sector. Joint ventures can also be
explored in this respect. It wants to expand range of Zenith in India.

Shop in Shops (Large 75 185
format stores) & Multi
Brand Outlets (dealers)
Tag Heuer & Dior (EBO & 5 14*
Kiosks)
PA Time Industries
Major Brands – Maxima
It operates through 56 distributors and 5000 retailers & 15 EBO. It intends to open at least 250
EBO by 2013.

Multi Brand Outlets 5,000 N/A
(dealers)
EBO 15 250
Priority Marketing Private Limited
Major Brands - Kenneth Cole, Skagen, BCBGMAXAZRIA, D&G, Moschino, Breil, Ted Baker, Aspen
It operates out of more than 200 outlets in across 35 cities around India. It has its own chain of
watch stores called ‘Just in Vogue’. It is in talks with new brands, but waiting for change in duty
structure to take it ahead.

Multi Brand Outlets 200 N/A
(dealers)
EBO 18 N/A
Raymond Weil India Private Limited
Major Brands – Raymond Weil
Currently it operates through 37 MBO and 1 EBO. It plans to add 13 more MBO in the next 6
months

2010 Ver1 77

Shop in Shops & Multi- 37 50
Brand Outlets
EBO 1 NA
Seiko Watch India Private Limited
Major Brands – Seiko
Seiko operates from 142 points of sale across multi-brand outlets and in 44 cities and plans to
add exclusive outlet by October 2010. Seiko plans to open 8-10 exclusive Seiko boutiques on a
franchisee model by 2012-13. In the same period, Seiko plans to increase retail touch-points to
250 through tie-ups with multi-brand stores. Seiko may consider setting up a factory in India in
the future.
It plans to increase the product line serving variety from wrist watches to wall clocks to table
clocks. Since the Fashion category is witnessing a boom, it is mulling to introduce its sub-brands
like Lorus, Pulsar and Alba later this year or early next year. It also plans to introduce its global
brands ‘Galante' and 'Grand Seiko' which are priced up to Rs 15 lakh, within this year. Besides
the company also plans bring the 'Ajanta' range priced between Rs 1 lakh and Rs 5 lakh this year.

Shop in Shops & Multi- 142 250
Brand Outlets
Seiko (EBO & Kiosks) 1 8-10
Swatch Group India Private Limited
Major Brands - Swatch, Calvin Klein (CK), Hamilton, Pierre Balmain, Mido, Certina, Longines,
Rado, Tissot, Léon Hatot, Blancpain, Breguet, Glashutte, Jaquet Droz, Omega & Tiffany & Co.
It has 300 points of sales across 53 towns in India. It operates through Exclusive Brand Outlets
(Omega, Rado and Longines), and multi brand watch outlets.
It plans to increase the number of mono brand stores. It plans to open 100 Swatch exclusive
boutiques if FDI opens up. It also looks to move beyond the top 6 cities to top 20 cities. It will
establish presence in department stores if the business terms are agreeable.

Omega 5 10
Rado 12 17
Swatch 14 NA
Multi Brand Outlets 270 NA

2010 Ver1 78
(retailers)
Timex Group India Limited
Major Brands - Timex, Ecko, Nautica, Valentino & Ferragamo
It currently operates through 69 ‘The Time Factory’ stores. The distribution network has
Franchisee owned or operated outlets (The Time Factory), Large Format Stores, and other multi
brand watch outlets.
Timex India will be investing about $ 1 million in retail expansion for both company-owned
outlets as well as franchised stores. It expects to grow the share of revenues coming from own
retail network from 20% to 33%. It plans to launch high-end international brands such as
Versace and Ferragamo in India to cater to the top end of the spectrum.

Time Factory 69 140
Shop in Shops (Large NA NA
format stores)
Multi Brand Outlets NA NA
(dealers)
Titan Industries
Major Brands - Sonata, Zoop, Fastrack, Titan, Xylys, Nebula, Raga, Tommy Hilfiger and Hugo
Boss
It has the widest distribution network in India with 11,000 dealers across 2500 towns, 299 World
of Titan stores across 196 towns. It operates through Company or Franchisee owned or
operated outlets (The World of Titan & Helios), Exclusive Brand Outlets (Fastrack, Sonata), Large
Format Stores, and other multi brand watch outlets
Titan Industries plans to invest Rs. 1,000 crores over five years to become the worlds’ third
largest watch company by 2015. As part of the growth plans it wants to establish a solid
foothold in the premium category. It also wants to focus more on its international markets.

Helios 2 50
World of Titan 299 330 (2011)
Shop in Shops (Large 296 NA
format stores)
Multi Brand Outlets 11,000 NA
(dealers)
Fastrack (EBO & Kiosks) 35 100
2010 Ver1 79
ABOUT TECHNOPAK
We are a management consulting firm with a difference. Founded in 1991 on the principle of
“concept” to “commissioning”, we are in the top 5 consulting firms in India by revenues. We are
strategic advisors to our clients during the ideation phase, implementation guides through start-
up phase, and trusted advisors overall. The industries we serve include Retail, Consumer
Products, Fashion (Textiles & Apparel), Healthcare, Hospitality & Tourism, Leisure &
Entertainment, Food & Agriculture and Education.
Our team currently comprises 300+ skilled professionals, from leading International and Indian
engineering and management institutes. Most of our consultants have hands-on industry
experience in their fields of specialization and represent a wide variety of functional
backgrounds. This enormous knowledge and talent pool enables us to create customized teams
for each project based on client requirements.
Technopak continues to keep up the impressive track record of helping clients improve their
performance in tandem with their mission, values, objectives and market realities of their
industries. Our 600+ clients are leaders in their market sectors and include leading Indian and
international businesses, entrepreneurs, investment houses, multilateral development bodies
and governments.
Services we offer in Management Consulting
At Technopak, we foster innovation and creativity which challenge conventional thinking and
generate practical and far reaching solutions for our clients. In 2008, we worked with over 130
clients across 180+ projects, in 20 countries besides India, across 5 continents.
Our key services are:
Business Strategy: Assistance in developing value creating strategies based on consumer

insights, competition mapping, international benchmarking and client capabilities.
Start-Up Assistance: Leveraging operations and industry expertise to ‘commission the concept’
on turnkey basis.
Performance Enhancement: Operations, industry & management of change expertise to

enhance the performance and value of client operations and businesses.
Capital Advisory: Supporting business strategy and execution with comprehensive capital
advisory in our industries of focus.

2010 Ver1 80
Consumer Insights: Holistic consumer & shopper understanding applied to offer implementable
business solutions.
Services we offer through our Group Companies
foleydesigns
Insights and innovation led product, packaging, space and strategic design, including design
research, concepts, engineering and prototyping. A blend of unique, contemporary and relevant
concepts and solutions.
www.foleydesigns.com
MINDSCAPE
Holistic consumer understanding applied to offer implementable business solutions revolving

around shopper insights, trend insights, design and innovation insights, marketing
communication and measuring customer delight.
www.indiamindscape.com
VERTEBRAND
Strategizing, planning and managing creation, development and growth of brands through a
scientific, transparent and process-driven methodology.
www.vertebrand.com
technopak Engineering
Planning, implementation and project management of plants, warehouses and entertainment

centres with a focus on modernization, process improvement, technical valuation, power &
water audit and environmental engineering.
www.technopak.com/engineering
Services we offer through our Strategic Partnerships
Cushman & Wakefield
World’s largest privately held real estate services firm. We offer, through them, comprehensive
retail real estate solutions to our clients.
www.cushwake.com
Dalziel+Pow
2010 Ver1 81
UK’s leading design consultancy for developing brand environments. We offer, through them,
design solution for retail environments.
www.dalziel-pow.co.uk
Envirosell
Global research and consulting firm specializing in the study of human behaviour in retail,
service, home, and online environments. We offer consumer and shopper insights.
www.envirosell.com

2010 Ver1 82
ABOUT AIFHI

2010 Ver1 83

AIFHI Whitepaper India Time Wear Industry - WIP - Oct 8 2010

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ALL INDIA FEDERATION OF HORLOGICAL INDUSTRIES India Time wear Industry - 2010

4. OVERVIEW OF INDIAN TIMEWEAR INDUSTRY………………………………………8

5. KEY CHALLENGES & BOTTLENECKS……………………………………………………43

Technopak Advisors Private Limited | Confidential

7. RECOMMENDATIONS OF THE REPORT………………………………………………...67

Technopak Advisors Private Limited | Confidential

Technopak Advisors Private Limited | Confidential

Technopak Advisors Private Limited | Confidential

We have extensively utilized Technopak’s internal Body of Knowledge, various media

Technopak consulting team interviewed top/senior management of member companies,

 Size, growth, structure and segments of the sector

 Taxation policies & its implications

 Need gaps and pain areas in the industry

 Major deterrents for the growth of this sector

 Future prospects & trends

 Industry expectation from the government and policymakers

Technopak Advisors Private Limited | Confidential

The various people interviewed are

Technopak Advisors Private Limited | Confidential

4. OVERVIEW OF INDIAN TIMEWEAR INDUSTRY

i. Market size, structure & segmentation

Technopak Advisors Private Limited | Confidential

1. Price based segmentation

Watch Market Segmentation by Price – Volume & Value

Luxury & Prestige 525 0.2

Affordable Luxury 275 0.9

Premium 180 1.5

Mass 1050 120

Economy 650 250

Figure 1.1: Market Segmentation by Price

Technopak Advisors Private Limited | Confidential

Technopak Advisors Private Limited | Confidential

3. Gender based segmentation

Figure 1.2: Market Segmentation by Type

Source: Technopak Analysis

Technopak Advisors Private Limited | Confidential

Technopak Advisors Private Limited | Confidential

ii. Current supply chain overview

Watch Market Supply Chain – Domestic Manufacturer / Assembler

Watch Market Supply Chain – Importer / Distributor

Source: Technopak Analysis

Movement Manufacturing: A movement in watch-making is the mechanism that measures the

Technopak Advisors Private Limited | Confidential

Subsidiary / (Licensee / Distributor): Many international watch companies are operating in

Technopak Advisors Private Limited | Confidential

iii. Watch Assembling & Component Manufacturing in India

Technopak Advisors Private Limited | Confidential

Centers of Watch Manufacturing in India

Rajkot - Gujarat is an important watch manufacturing centre in India. It produces millions of

India’s Strength and Opportunities as a Manufacturing Hub

Technopak Advisors Private Limited | Confidential

 Increase cost of manufacturing in China

India’s Weakness and Threats as a Manufacturing Hub

Technopak Advisors Private Limited | Confidential

iv. Evolving retail formats

Benefits of modern retail in watch industry

Prominent organized retail formats currently in the watch market

 Multi Brand Outlets (MBOs)

Technopak Advisors Private Limited | Confidential

 Exclusive Brand Outlets (EBOs)

 Large Format Stores

Key challenges and scope of improvement in time wear retail

Technopak Advisors Private Limited | Confidential