Hamleys, the world-famous toyshop, is preparing to enter the Indian market through a joint venture with one of the sub-continent’s largest industrial conglomerates.

A source close to Reliance Industries, which is controlled by Mukesh Ambani, India’s richest man, said that the group had held talks with the 248-year-old British-based retailer. A tie-up could be agreed within a month.

As a British institution with an international reputation, Hamleys is likely to enjoy a head start in new markets.

Its flagship shop in Regent Street is one of London’s ten most popular tourist attractions, with four million visitors a year.

The durability of the Hamleys brand in the age of the Apple iPod and the Nintendo Wii was confirmed over the Christmas trading period when it emerged as a high street winner.

Like-for-like sales rose by 11.3 per cent in the final five weeks of 2007, compared with a year earlier. Internet sales were up by 46 per cent, and revenues at the Regent Street store rose 7.7 per cent.

Hamleys prides itself on a history of breaking down cultural barriers.

A century ago, for instance, it became the first store in Britain to sell a novelty game from China called ping pong.

Hamleys was acquired by Baugur, the Icelandic investor that owns Oasis and House of Fraser, for £47 million in 2003 and has since set its sights on international expansion.

The group has a small presence in Denmark and is set to open in Jordan next month, the first of several stores planned for the Middle East.

The retailer is also talking to potential partners in emerging markets, including China, as part of an ambitious plan to triple its revenues to about £150 million in the next three to five years.

However, the group will face some hurdles in India. Its partnership with Reliance, the largest private sector company in India, is likely to have to take the form of an arm’s-length licensing deal, because retailers that sell several brands — as Hamleys does — are barred from investing directly in the Indian market.

India’s highly fragmented retail industry is estimated to be worth nearly £200 billion a year and is expected to double in value by 2015.

However, the prospect of foreign chains entering the market has triggered political concern amid protests from independent retailers.

Gauging the Indian consumer’s willingness to splash out on relatively expensive toys will also be crucial. Marks & Spencer, which is also in talks with Reliance, has failed to make an impression in India so far after pricing itself out of the market.

At the end of last year it was forced to reduce prices for its clothes, which it sells through an Indian joint venture, by up to a third.

Reliance, whose interests range from chemical production to fresh food, appears to have set its eyes on the high end of the Indian market. The group is planning to build a number of shopping centres in large cities, including Bombay, Delhi and Bangalore, to appeal to the burgeoning middle classes. It has also held talks with the luxury marques Versace, Bulgari and Cartier.

A Reliance source said: “We expect to have something substantial to announce in four to five months.”

The talks came after Reliance rebuffed partnership approaches from the world’s three largest retailers — Wal-Mart, Carrefour and Tesco — to strike out on its own.

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