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BW Businessworld

Dyson: India Calling

Dyson is planning to invest £150 million in the next three to five years to open stores and set up retail network in India

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It could not have been a worse day to arrive in Delhi for Sir James Dyson, the 69-year-old vacuum cleaner guru, engineer, inventor and Britain’s 13th richest person. He looked exhausted, tired and a bit down having interacted with the Indian media and business delegations all through one of the smoggiest days that the national capital had witnessed in recent memory.

Dyson flew in with British Prime Minister Theresa May as part of the business delegation. Ironically, Dyson sells innovative and out-of-world solutions for air purification. His company also sells vacuum cleaning, hair driers, hand driers and blade-less fans that spew cold or hot airs while simultaneously removing the harmful micro particulate matters.

As we settled down with Sir James in a small suite filled with Dyson’s wonder products at Delhi’s Taj Palace hotel, we got a sense that some senior colleagues from Dyson’s Hong Kong office were also in town to update their boss about the application they had recently filed with the Ministry of Finance and the Ministry of Commerce and Industries for seeking permission to hold the Single Brand Retail license for entering the Indian market.

Sir James is absolutely sure that Dyson will own and operate its own stores in India, if permitted, where he will sell his modern range of electronic products. “We have requested for a three-year relaxation in the local sourcing norms. We are hoping to hear on our application by midDecember,” says a senior executive from Dyson Group, who works in the Hong Kong office. “Do ask our founder and chief engineer for more information,” he said referring to Sir James Dyson.

“Why did you decide to enter India so late,” we asked Dyson straight away. “Because we needed to have the right products suitable for the Indian market. Having done remarkably well in Malaysia, Japan, Hong Kong, Singapore and several other countries, we felt this was the right time to enter and expand in India,” Dyson said.

As part of its India plans, Dyson will invest £150 million in the next three to five years to open stores and set up retail network here. “We will import the products from Malaysia, Singapore, or Philippine as we have our manufacturing plants there,” he said. Dyson designs and manufactures vacuum cleaners, hand dryers, bladeless fans, and heaters. It sells patented machines in over 70 countries and employs more than 7,000 people worldwide. But is it ready for the Indian conditions?

Local Sourcing Currently, 100 per cent foreign investment is allowed in single-brand retailing, of which up to 49 per cent foreign investment is under the automatic route and the balance under the approval route i.e., nod from the Foreign Investment Promotion Board. The local sourcing norm kicks in when FDI goes beyond 51 per cent. As per the current norms, the single brand licensor has to source at least 30 per cent of its raw material from local manufacturers. And this is where Dyson Group is facing some challenge as the group feels it cannot compromise its patented appliances before having a significant presence in India.

But there is some good news for Dyson and all other interested applicants. The NDA government is said to be reviewing the local sourcing norms in single-brand retail. One of the options under discussion is cutting down the mandatory requirement of 30 per cent local sourcing by half in case the licensor’s investments is much above the 51 per cent FDI and the proposal has been vetted by the government. Not just Dyson, a number of other US-based brands including Apple have been lobbying with the central government to re-look at the local sourcing norms.

Wonder Products
Dyson claims to offer products that are the fastest to dry hands hygienically with HEPA filtered air. Dyson Airblade hand dryers use 690 km/h sheets of air to scrape water from hands like a windscreen wiper, drying them quickly and hygienically in just 10-12 seconds, it claimed. Next on offer is the Dyson 360 Eye, a floor cleaning robot that uses a 360° panoramic vision camera and IR distance sensors to map a room and navigate. When asked about its target consumers in India, Dyson said: “There are 25 million well-off middle-class. We think our products will do well.” And when quizzed about the India pricing of its offerings, Dyson revealed that the average pricing of some of the product was around £300. “It cost what it costs to make one of these. We cannot compromise there,” he said.

Dyson said they may offer Indiaspecific solutions too as they have done in Japan, Germany, US and some European countries. “But all depends on getting the approval on time. We can start from the middle of next year if we get approval in next few months,” he said.

How are your products different from the rest? That was a natural questions to ask. Dyson was quick to respond. “There are two differentiating factors. We project the air properly in the room so it cools and purifies the air at the same time. When it cleans the room, it switches off but it keeps sniffing the room. As soon as the air gets dirtier it switches on automatically. That is the big difference,” he said. When asked about the keenness on local sourcing from India, Dyson said there were couple of ways of doing that. “Manufacturing is one way, software and hardware sourcing is another way. So we will study the market in the first or second year before we take a call on it,” he said.

When asked about competition from low-priced similar products, Dyson said competition is present in every market. “We think our products are better engineered and better designed. We are number one in Germany in vacuum cleaners and purification. We are doing well in hair dryers. We are number one in Japan and number two in South Korea. So we are not afraid of competition,” he added.

Will your purifiers work in Indian condition? “You can control air pollution at home. Turn on one of our products that cools the air as well as purifies it. We have smog problem in the UK, too. In Singapore, there is problem arising out of crop burning in adjacent countries. Our products work well in Singapore,” He said emphatically adding his products had several innovations rolled into one. “Our purifier not only cools and heats the air, it purifies as well. It switches off automatically and turn back on as soon as air quality in the room drops,” he said. ‘Welcome to India’ and ‘all the best’ is what we said as we ended the chat.

[email protected]; @ashish_BW