Danish jewellery maker Pandora has reportedly signed a LoI (letter of intent) with Pan India Charms & Jewellery Private Limited about distribution of Pandora jewellery in India.

The report further states that as per the terms of the distribution agreement, Pan India will be granted exclusive distribution rights for Pandora jewellery in India, in which Pandora currently has no distribution. The agreement is subject to certain conditions to be fulfilled.

Besides, the analysts expect it to take over the distribution in a few years once it has gained sufficient knowledge about the market, a model it has used successfully in other markets.

As per the plan, the company is planning to open 50 shops India in the next three years as it pursues an ambitious expansion plan.

The Indian jewellery market is worth more than USD40 billion a year and is expected to grow 7 per cent per year through 2021, Pandora said. However, the market has traditionally been focused on gold and diamonds rather than silver, Pandora's favourite material, which only makes up 5 per cent of the market.

A shift in consumer behaviour especially amongst younger Indians towards western brands could however spell success for Pandora's move, analysts said.

"Jewellery as a fashion statement is increasingly popular among consumers and with India already being one of the largest jewellery markets in the world, the country holds a great potential for Pandora," Chief Executive Anders Colding Friis said in a stock exchange announcement.

Pandora said last year that it expected to open between 200 and 300 new shops per year in 2016 through 2018, but has since raised that number to around 325 shops in 2016 with half of them in Europe and a quarter in the Americas and Asia.

"The expansion into India will greatly support Pandora in achieving the target it has set up for new shops," analyst Michael Friis Jorgensen of Alm. Brand Bank said.

He said it was too early to assess how much India would contribute to Pandora's future earnings as it depends on the company's ability to spearhead a shift in consumer preferences towards silver.