India new El Dorado for Swiss watches?

Swiss watchmakers are increasingly turning their sights towards India, thanks to a new free trade agreement that is due to gradually open the doors for luxury timepiece exports.

While some brands are already in the starting blocks, others are waiting to see whether India will become a new land of plenty.

“India represents enormous potential,” Yves Bugmann, president of the Federation of the Swiss Watch Industry, told AFP at Watches and Wonders, the Geneva watch fair which closed on Monday.

Despite its 1.4 billion population, India was in 22nd place for Swiss watch exports in 2023, just ahead of Switzerland’s Alpine neighbour Austria.

The value of Swiss watch exports to India was just 218.8 million Swiss francs (about R4.5 billion) – way behind front-runners the United States (4.2 billion francs), mainland China (2.8 billion francs) and Hong Kong (2.4 billion francs).

High taxes have long discouraged watch brands, particularly the most expensive labels.

Although the calculation is complex, it includes customs duties of around 20% for watches, a goods and services tax of 18%, plus an additional surcharge.

However, last month, after 16 years of negotiations, the European Free Trade Association (Efta) – Switzerland, Norway, Iceland and Liechtenstein – signed a free trade agreement that will reduce customs duties “progressively over a period of seven years”, said Bugmann.

“It’s an extremely interesting market, but will this be the new El Dorado of the watch industry? We don’t know yet.”

In a study published in mid-October, the audit firm

Deloitte estimated that Swiss watch exports to India could exceed 400 million francs by 2028.

And it could climb into the top 10 export markets within a decade, thanks to its ultra-high net worth individuals, as well as its growing middle class.

With the Efta agreement, “we are feeling things beginning to move”, Karine Szegedi, the report’s author, told AFP.

“Seven years is already tomorrow,” said Edouard Meylan, the chief executive of H Moser, a small brand undergoing an expansion, where the average watch price is around 40 000 francs. “We sense a tremendous appetite [and] you have to be the first to establish yourself.”

Meylan has already teamed up with a local distributor and is hoping to open a store in New Delhi this year, before Diwali – the Hindu festival of lights, which will be celebrated this year from the end of October into early November.

Thierry Stern, the president of Patek Philippe, said India would be increasingly on the radar, but would “especially interest brands that produce large quantities”, he told AFP.

Patek Philippe produces 72 000 watches per year – a small number for a big-name brand, which therefore has long waiting lists and sees its timepieces go for millions of dollars in auctions. “I don’t have enough (watches) already,” said Stern.

“For Patek Philippe, it would be almost impossible to open in India. However, Patek Philippe’s clientele travels a lot,” he added, with many Indian customers already coming to Geneva or London to make purchases. –