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India allows 100 percent FDI in single brand retail
Tuesday January 10, 2012 07:44:24 PM,
IANS
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New Delhi: India
Tuesday allowed 100 percent foreign equity in single brand retail,
notifying the norms that among other things said all wholly owned
international brands will need to source 30 percent of their
requirements locally.
The government justified the move, saying that foreign direct
investment (FDI) in single brand will attract investments in
production and marketing, improve the availability of such goods
for the consumer and encourage sourcing of goods from India,
according to a notification by the commerce and industry ministry.
"The cabinet took the conscious decision to liberalise policy for
FDI in single brand retail. FDI in single brand has led to
emergence of some global majors in Indian market," said Commerce
and Industry Minister Anand Sharma.
Until now, global retailers owning a single brand had to look for
an Indian partner as the cap on foreign equity was 51 percent.
The ministry had earlier mooted relaxation in multi-brand retail
investment norms up to 51 percent, which led to a nation-wide
furore and unrest, even within the ruling United Progressive
Alliance government, resulting in the withdrawal of the decision
last month.
As per the notifications, products to be sold should be of a
single brand only as they are sold internationally.
Companies which propose to set up wholly owned subsidiaries under
the single brand format would have to source at least 30 percent
of the value of products sold from Indian small industries,
artisans and craftspersons.
The notification defined small industries as entities which have a
total investment in plant and machinery not exceeding $1 million.
"Further, if at any point in time, this valuation is exceeded, the
industry shall not qualify as a 'small industry' for this purpose.
The compliance of this condition will be ensured through
self-certification by the company, to be subsequently checked, by
statutory auditors," according to the notification.
"This step will provide stimulus to domestic manufacturing value
addition and help in technical upgradation of our local small
industry," said Sharma.
Also, only products which are branded during manufacturing will be
considered for entry under the single-brand format.
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