Govt notifies 100 pc FDI in single brand retail
Govt notifies 100 pc FDI in single brand retail
The foreign brands will have to, among other things, source 30 pc of their requirements locally.

New Delhi: India on 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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