Swatch To Source Melee In India In Line With Gov't Guidance

Switzerland's Swatch firm is to source small diamonds in India to meet an official condition of 30 percent local sourcing for foreign firms which have a single retail brand. Swatch is seeking a government permit to establish stores in the sub-continent.

Swatch has been in communication with the Department of Industrial Policy and Promotion (DIPP), saying that its Indian unit would source melee diamonds in the country and export them to its watchmaking units in Switzerland.

"The local sourcing of diamonds will lead to the generation of business and employment opportunities for traders and artisans," Swatch said in its application to the DIPP, according to the Indian media. "It will also result in foreign exchange flowing into India on account of the export of diamonds."

Apart from melee goods, Swatch is also aiming to source finished goods such as gifts; raw material such as buckles; packaging material like pouches, tags and cardboard boxes; in-store material such as displays, brochures, printing material, flyers, banners and posters; and retail architecture material including furniture, showcases and interior fittings, The Economic Times reported.

The proposal from Swatch comes just as the DIPP has been thinking of scrapping the clause on 30 percent local sourcing for foreign companies, in a bid to attract higher foreign direct investment (FDI) since many international brands regard it as a deterrent to becoming involved in the Indian market, the report adds.

India allowed 100 percent FDI in single-brand retail in 2011 with a compulsory 30 percent sourcing from small and medium-size enterprises. However, in September 2012, the government changed the sourcing clause to being preferable rather than obligatory.

Swatch is aiming to invest $10 million in India over five years, and to establish 30-35 Swatch branded products stores.

The Swatch Group owns 18 brands including luxury brands Omega, Tissot, Rado and Longines. Some of these brands are sold in India through dealers and third-party stores. Swatch watches are available through a network of authorized retailers and single-brand stores operated by franchisees across the country.