Tuesday, January 10, 2012

Government notifies 100% FDI in single-brand retail.


During last three and half years, FDI worth only Rs 196 crore was received in the sector.

The government on Tuesday notified 100 per cent foreign direct investment (FDI) in single-brand retail. Currently, single-brand retail stores can have 51 per cent FDI.
The decision to increase FDI in the retail sector was taken by the Cabinet on November 24 but the government was forced to put on hold FDI in multi-brand retail after political opposition.

The move will pave way for global chains like Adidas, Nike, Louis Vuitton and Gucci to have full ownership of their India operations.

FDI in Single Brand product retail trading would be subject to the following conditions:

(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51 per cent, mandatory sourcing of at least 30 per cent of the value of products sold would have to be done from Indian 'small industries/ Village and cottage industries, artisans and craftsmen.

"The Cabinet took the conscious decision to liberalize policy for FDI in single brand retail. We have now allowed foreign investment of up to 100 per cent with riders that FDI beyond 51 per cent there will be mandatory sourcing of at least 30 per cent of the total value of the products sold from small industries. This step will provide stimulus to domestic manufacturing value addition and help in technical up gradation of our local small industries," Commerce Minister Anand Sharma said.

Though 51 per cent FDI in single brand was allowed in February 2006, not much investment has come in the sector.

During last three and half years, FDI worth only Rs 196 crore was received in the sector.

Experts hailed the decision and said that the move would make India a retail destination and help in enhancing foreign investments.

"It is an excellent move which would help in bringing more FDI into the country," KPMG Executive Director Krishan Malhotra said.

"The decision would help in bringing latest products and technologies. It would also provide more choices to consumers," PricewaterhouseCoopers Associate Director Goldie Dhama said.

A decision on FDI in multi-brand retail may be taken after the assembly elections, Chief Economic Adviser Kaushik Basu had told NDTV earlier.