American fashion label Banana Republic plans to open its first store in India by early next year and is already scouting for locations to set up shop by February next year, The Economic Times has reported.

The brand, owned by American apparel maker Gap Inc, will partner with Arvind Retail for its India entry, said J Suresh, Arvind Retail Managing Director."We already have a strong partnership with Gap and now we are exploring other brands from its portfolio," Suresh said.

GAP Inc has six brands including Gap, Banana Republic and Old Navy. Industry observers believe Banana Republic will have a wide appeal since there is a dearth of 'bridge-to-luxury' brands in the country. Moreover, the rising population of fashion conscious Indian youth with high spending power is expected to create a lucrative market for this label.

"Affordable luxury brands which are within the range of Rs 4,000 to Rs 12,000 is an attraction among youngsters and luxury brand aspirants. Banana Republic will be competing with brands such as Tommy Hilfiger, Calvin Klein in terms of price points, but since there are not many international players in this segment, the market potential is high," said Bijou Kurien, a retail sector veteran.

Arvind Retail runs more than 800 stores in India across a portfolio of more than 30 brands including US Polo and Arrow. It has opened nearly eight GAP stores in less than a year of its partnership with the world's third largest apparel brand.

According to industry sources, GAP sold apparel and accessories worth Rs 80 per square foot daily on an average surpassing every other retailer in the country in terms of sales per square foot.