Unlike Multi-brand Retail, which faced stiff resistance, Single Brand Retail Foreign Direct Investment (FDI) seems to have been approved without a hitch!
Indian Ministry of Commerce & Industry has just released a notification announcing approval for 100% FDI (Foreign Direct Investment) in Single Brand Retail. Earlier, only 51% foreign investment was allowed.
According to the amendment made in ‘Circular 2 of 2011- Consolidated FDI Policy’, FDI in Single Brand product retail trading would be subject certain conditions.
Conditions on 100% FDI in Single Brand Retail
- Products to be sold should be of a ‘Single Brand’ only.
- Products should be sold under the same brand internationally i.e. products should be sold under the same brand outside India as well.
- ‘Single Brand’ product retail trading would cover only products which are branded during manufacturing.
- The foreign investor should be the owner of the brand.
- For any FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian ‘small industries / village and cottage industries, artisans and craftsmen’. [‘Small industries’ would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million.]
This is is a great announcement for many foreign brands who already have their presence in India as well as those who don’t (Likes of IKEA, GUCCI etc). However, they were not able to grow fully due to restriction in FDI investment. With Indian Government now allowing 100% FDI, they would aggressively invest in fast Indian Market. Would love to hear your views on this!
[Source: Government Notification PDF]
[…] their own creations. Many International luxury brands are making foray into India, especially after single brand retail FDI approval by Indian […]
Hi! Very rightly said..i have been waiting for giants like star bucks and IKEA to foray into our markets. However, I have failed to understand the concept of a single brand FDI and a multi brand FDI. How will it help us when we allow a single brand FDI foray our market?
it leads to rural upliftment we should ensure 100 % fdi in different brands also.
that's a very good move by indian govt to approve 100% fdi it would result in growth of d market.
The Govt has promised to bring elephant home. When opposition parties stood up against the move and kirana mafia threatened them, they folded their tail and tossed the idea.
However as a face saving, they are bringing this ‘100% participation in Single Brand retail’ issue as if it is a respectable alternative to FDI in Multi brand retail.
The industry estimated that if FDI was allowed in Multibrand retail, the forign investments / inflows will be about 10 billion US$ in next 5 years with millions of job creations.
Why do you think, opposition and Kirana mafia kept silent while Govt allowed 100% FDI in Single Brand retail? Becasue it will not have any effect on the cause for which they are fighting.
Even considering smooth sailing of this bill, we can count on fingers the number of companies which will come to India. We can even count with our own fingers the number of jobs that will get created. We can even count in a day all the money that will pour into India. With so many riders, I dont see more than 10 brands that will benifit from this move.
Basically how I see the whole drama is Govt promised to bring in an Elephent and brought the hair on its tail.
I am not saying that it is a wrong move. Every penny that comes in counts. But projecting it as an alternative to FDI in retail in all, is a laughable thing.
Just my two paisa :)
Dear Altaf,
Absolutely agreed, it is no way an alternative to FDI in Multi brand retail.
FDI in Multi Brand Retail will be a huge positive for Indian retail Industry…and not only that, it will create millions of jobs and help our farmers more than anything else.
Having said that opening up 100% FDI in single brand retail is big as well – Contrary to your belief, I think many INternational brands will now come to India as they dont need a partner to open up their shops. Existing guys will grow aggressively… So lets not undermine this news as well.