Govt notifies 100 pc FDI in single brand retail
"Foreign Direct Investment (FDI), up to 100 per cent , under the government approval route, would be permitted in single brand product retail trading," a press note by the Department of Industrial Policy and Promotion (DIPP) said.
However,
in respect of proposals involving FDI beyond 51 per cent, the mandatory
sourcing of at least 30 per cent would have to be done from the
domestic small and cottage industries which have a maximum investment in
plant and machinery of USD 1 million (about Rs 5 crore).
"FDI
in single brand has led to emergence of some global majors in Indian
market...This will provide stimulus to domestic manufacturing value
addition and help in technical upgradation of our small industry,"
Commerce and Industry Minister Anand Sharma said.
The
decision to increase FDI in single-brand retail was taken by the
Cabinet on November 24 along with opening the gates for overseas
investment in multi-brand retail.
However,
the Government was forced to put on hold FDI in multi-brand retail by
several political parties, including UPA ally Trinamool Congress.
At
present, for single-brand retailers, 51 per cent FDI is permitted.
Removal of investment cap would help global fashion brands especially
from Italy and France to strengthen their interest in the growing Indian
market.
Many
big names have already set up their operations in the country by
partnering with Indian partners. The new policy would allow them to buy
out the domestic partners.
The
government said the move which comes into effect immediately would
enhance competitiveness of Indian enterprises through access to global
design, technologies and management practices.
According
to the riders, however, the products by the global chains should be of
'single brand' only and be sold under the same brand internationally.
Single
brand retailing would cover products which are branded during
manufacturing and the foreign investor should be owner of the brand.
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.
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