Retail Cheer: 100% FDI in single brand retail gets nod

Wednesday, 11 January 2012
The commerce ministry has given the green signal to the much-awaited policy permitting up to 100 per cent FDI in single-brand retail. And now, retailers are looking forward to a political consensus on 51 per cent FDI in multi-brand retail in the near future. The move was made in a few hours after the finance ministry issued a statement allowing French luxury chain Christian Louboutin to open stores in India and retailers have wholeheartedly welcomed the decision.

On November 24 last year, the Union Cabinet had decided to allow up to 51 per cent FDI in multi-brand and 100 per cent FDI in single-brand but due to political opposition to allow 51 per cent FDI in multi-brand retail, the decision had to be put on hold. As far as the decision on single-brand retail was concerned, it waited for the Parliament session to get over before notifying the policy.

As per the notification, any foreign retailer looking at setting up shop in the single-brand category must source at least 30 per cent from Indian small and medium enterprises (SMEs). The issue had earlier turned controversial after a press note circulated by the commerce ministry recently had stated that foreign retailers could source from SMEs across the world.

The total retail pie in India is estimated to be around Rs 26.5 lakh crores), of which organised retail is less than 10 per cent. Single-brand is just a small fraction of organised retail at present but with this development, things are set to change as big global brands, including Ikea, GAP, Prada, Abercrombie, Hennes & Mauritz and Arcadia, may want to set up shop after the policy change.

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