Wednesday, January 11, 2012

Indian Goverment allows 100% FDI in Single Brand Retail

The Indian government gave green signal to foreign investors for 100% investment in single brand retail on Tuesday however multi brand retailing for foreign investors is still hangiing in political cobweb. Till now Foreign Direct Investment (FDI) in retail trade is prohibited except in single brand product retail in which 51% FDI is permitted, subject to certain conditions. Now The Department of Industrial Policy & Promotion (DIPP) part of ministry of Commerce & Industry has now allowed 100% in single brand product retail trading under government's approval. However provisions for 51 percent FDI in multi-brand retail is still on hold.

Following are the conditions for single brand retailing for foreign investment :
  1. Products should be sold with same brand internationally i.e. Product should be sold under same brand in one or more countries other than India.
  2. 'Single Brand' retail trading would cover only products which are branded during manufacturing.
  3. The foreign investor should be owner of the brand.
  4. Beyond 51 percent FDI would need to ensure mandatory that at least 30% of value of products sold to be done from 'small industries/village and cottage industries, artisans and crastsmen.'The government has said that ‘small industries’ will be defined as industries with a total investment in plant & machinery not exceeding $1 million. This valuation refers to the value at the time of installation, without providing for depreciation. If this valuation exceeds at any point in time, the industry shall not qualify as a ‘small industry’ for this purpose.