The government on Tuesday
allowed 100 per cent foreign direct investment (FDI) in single-brand retail,
notifying the norms that among other things,
all wholly-owned international brands will need to source 30 per cent of their requirements locally.
The government justified the move, saying that
foreign equity 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 per cent.
The ministry had earlier mooted relaxation in
multi-brand retail investment norms up to 51 per cent, 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.
According to 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 per cent 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.
- with inputs from agencies
(Picture: AP) 
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