Arvind Mills calls off JV with Diesel

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The Italian denim giant had entered into a partnerhsip with Arvind in April 2007 for branding and distribution of its products. While Diesel held 51 percent stake in the venture, Arvind held the remaining 49 percent.

The companies had planned to set up 15 stores by 2010 in cities like Mumbai, Delhi, Hyderabad, Bangalore, Chennai and Chandigarh to retail Diesel's products such as casual apparel, innerwear, watches, shoes and jewellery.

According to AT Kearney Retail Index, India's retail apparel market is the third most attractive destination in the world, after Brazil and China.

"In India, apparel is the second largest retail category, representing 10 percent of the $37 billion retail market. It is expected to grow 12-15 percent per year," the market research consultant said.

Over the years, India has attracted foreign apparel retailers like Calvin Klein, Mango and others, which have set up own-branded showrooms.

Indian laws currently allow 51 percent foreign direct investment (FDI) in retailing by companies that sell only a single brand like Reebok, Nike, Nokia or Benetton or Mark & Spencer (which has finalized a joint venture with India's Reliance Industries).