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]