Mumbai, Nov. 23: Swiss firm Dufry International will set up duty-free shops at airports.

The company has entered into a joint venture with Interglobe Enterprises for the shops in Delhi, Mumbai, Bangalore, Kochi and Udaipur. Dufry will hold a majority stake in the 51:49 joint venture.

Other foreign companies setting up such shops include Alpha Airports Group Plc, Flemingo International and Nuance Group.

UK-based Alpha Airports has teamed up with Kishore Biyani’s Pantaloon Retail, while Nuance has joined hands with Shoppers Stop, part of K Raheja Corp.

UAE-based Flemingo has a joint venture with DFS India for managing its outlet at the Mumbai airport.

Flemingo is also present in Kenya, Sri Lanka and Tanzania.

The Foreign Investment Promotion Board recently approved Dufry’s joint venture proposal on the condition that the shops will be only at international airports.

The board had deferred Dufry’s proposal in June this year as the commerce ministry had sought a clarification on the specific locations where it will set up the shops.

Spending per passenger in duty-free shops in the country is lower than the global norm, indicating a huge potential for the segment.

Privatisation of several airports and the fast expansion of airlines have encouraged companies in this segment to widen their product portfolio.

However, the products sold in the stores are not very cheap because of transportation costs and high concession fees that operators have to pay to the airport authorities.

The entry of foreign players into the domestic duty-free segment has prompted state-owned India Tourism Development Corporation to form a 50:50 joint venture with Spanish company Aldeasa.

Last month, Dufry had sealed a merger agreement with Hudson Group Holdings, which reinforced its leading position in the market.

The Dufry-Hudson combine will operate around 1,000 shops at 137 airports.