India looks at permitting 100 percent FDI in single-brand retail sector

India's federal government is looking at permitting 100-per cent foreign direct investments (FDI) in single-brand retail sector,  a move that would benefit global retail chains mulling of starting operations in the country.

The increase in FDI is from the present permissable limit  of 51 per cent, and would be accompanied by tightening of norms for the sector, according to reports in the media.

Media reports quoted the industry secretary R P Singh as saying that the proposal to remove foreign investment cap in single brand retail was under consideration.

A committee of top civil servants, of which R P Singh was a member, in July agreed to recommend to the cabinet allowing foreign firms to take a 51-per cent stake in multi-brand retail operations.

This will enable global retail giants like Wal-Mart, Carrefour SA, Tesco Plc and Metro AG to open stores in the country and invest in supermarkets.

Full ownership of their ventures may also encourage some of the brands to go on their own instead of entering into joint ventures or licensing agreements with Indian retailers.

Reliance Retail, part of the Reliance Industries, has a joint venture with Marks and Spencers, while Trent, the retail arm of the Tata group, has tied up with Spanish fashion retailer Inditex Group that owns the Zara brand.