Under state control, India’s duty-free business in 2011 was ultimately tiny, with a value that had no relation to the size of the market, estimated at more than 90 million passengers. Poor retail facilities, a clunky supply chain and the bureaucracy of the national airport authority, said a recent report by BW Confidential, were all barriers to development. No surprise then that beauty brands had kept away.

Even upgrades at certain airports by the government along with private partners in the past two years couldn’t ensure success, but there was a valid effort. Executive Yasmin Kapoor at IDFS Tradings, the inflight travel-retail specialist, admits: “As there was no concept of retail in the old Indian airports, the ambiance that was required for travel retail was a non-starter.”

Those private-public partnership projects at hubs like Indira Gandhi International and Chhatrapati Shivaji International in Mumbai did change the structure of the market and gave beauty brands more confidence about it. Suddenly there were big airport players in India like Fraport, Malaysian Airports and Airport Company South Africa which understood not just the value of retail, but how to implement it. As a result, global travel retailers like DFS Group, The Nuance Group, Aer Rianta International and others moved in. But not always painlessly.

Nuance, for example, pulled out of its Hyderabad operation in May 2010 after two years because “it became clear that the original assumptions for the business regarding passenger numbers and, more importantly, the retail spending potential of passengers, had been far too optimistic,” says a local source at Nuance Group India. Despite swanky new terminals, and even whole new airports, at Bangalore, Delhi, Hyderabad and Mumbai, travel retailers are learning—sometimes the hard way—that India is more multifaceted than first thought.

To read BW Confidential’s full report on the travel-retail market in India and Asia Pacific go to: www.bwconfidential.com