Duty-free shops: ITDC in talks with retailers

The India Tourism Development Corporation, which runs hotels like the Ashok and Samrat, is in discussions with home-grown retail chains, as well as global retailers to form a 50:50 joint venture to run duty-free shops at international airports in India.

The government-owned hospitality chain, which lost almost all of its duty-free shops (barring two) to others as a result of the competitive bidding in the last couple of years, intends to regain its market share - at least marginally- in the next one year.

ITDC is preparing to participate in the bidding process for 15 locations that are coming up for renewal of licences by the Airports Authority of India in the next one year, according to I Majumder, vice-president (duty-free shops division), ITDC.

"We are looking at various retail chains, such as Future Group and Spencer's Retail, among others, to have a 50-50 joint venture company to open duty-free shops at airports, as well as sea ports, in the coming one year," Majumder said.

The company, which had 38 duty-free shops till 2006 across India, is managing only one duty-free shop at the Goa airport and a second one will be inaugurated by the end of this month at Coimbatore. It lost all the others in the rebidding process at most of the airports.

"We lost many of the bids at that time because other participants made unrealistically high bids, as the tourism industry was booming," Majumder said.

There has been a significant decline in footfalls at Indian airports due to the slowdown in the economy and this has affected the business of duty-free shops across India, he added.

"Our shop at Goa airport has seen a decline of 25 per cent in footfalls. In 2008-09, the single store reported a turnover of Rs 7 crore (Rs 70 million) with marginal loss. However, we are expecting a growth of around 28 per cent in turnover from the Goa outlet this year," added Majumder. "We didn't make a profit last year as we had to pay arrears

to all our employees due to the implementation of the Sixth Pay Commission," he added.

ITDC had a 50:50 joint venture with Aldeasa Vancouver for its Mumbai-based duty-free shop, which it lost to DFS.

Photograph: Duty free shops at the Mumbai international airport.