India allows 100 per cent FDI in single brand retail

The government today notified 100 per cent foreign direct investment (FDI) in retail business involving single brands, allowing global chains like Adidas, Gucci and Louis Vuitton to own 100 per cent of their India operations.

The decision to allow 100 per cent FDI in single brand retail was announced through a press note issued by the department of industrial policy and promotion under the ministry of commerce and industry.

The government, however, has added a rider to the announcement, making it obligatory for single brand retailers to source at least 30 per cent of the total value of the products sold in India from 'small industries/village and cottage industries, artisans and craftsmen in the country.

Union minister of commerce, industry and textiles Anand Sharma said the cabinet took the conscious decision to liberalise policy for FDI in single brand retail as it has led to emergence of some global majors in Indian market.

''We have now allowed foreign Investment up to 100 per cent with the stipulation that in respect of proposals involving FDI beyond 51 per cent there will be mandatory sourcing of at least 30 per cent of the total value of the products sold would have to be done from Indian 'small industries/village and cottage industries, artisans and craftsmen,'' Sharma said.

''This step will provide stimulus to domestic manufacturing value addition and help in technical upgradation of our local small industry,'' he added.

The government has reviewed the extant policy on FDI and decided that FDI, up to 100 per cent, under the government approval route, would be permitted in single-brand product retail trading, subject to specified conditions, the press note said.

Government expects FDI in single brand product retail trading to attract investments in production and marketing, improve the availability of such goods for the consumer, encourage increased sourcing of goods from India, and enhance competitiveness of Indian enterprises through access to global designs, technologies and management practices.

FDI in single brand product retail trading would be subject to the following conditions:

• Products to be sold should be of a 'single brand' only;
  
• Products should be sold under the international brand;
  
• Trading would cover only products branded during manufacturing;
  
• The foreign investor should own the brand;
  
• For FDI beyond 51 per cent, 30 per cent of products should be sourced in India.

Foreign direct investment in retail trade has so far been prohibited except in single brand product retail trading.