The Government of India has taken a significant step towards opeing up the retail sector to foreign investment. The recent decision of the Central Government to allow FDI in "single brand" retailing, with 51% investment from the foreign collaborator and 49% from the Indian counterpart, is a much-awaited initial step before opening up the retail sector completely in the near future. The brand-conscious modern Indian, who has no qualms spending a fortune on overhauling his wardrobe, will now have an opportunity to add more foreign brands.
According
to the Department of Industrial Policy and Promotion (DIPP), 51% FDI in single
brand retail comes with certain conditions: The products sold should be of a "single
brand" only, and should be sold under the same brand even internationally.
Also, these products should be branded during manufacturing itself. Applications
for retail FDI will have to specifically indicate the product or product categories
which are proposed to be sold in retail outlets. Any addition to the product or
product categories to be sold under single brand will require fresh government
approval, according to the rules issued by DIPP.
Partial
opening up of the retail sector is the first small step taken by the government.
This is leading to more and more foreign companies looking at opening their outlets
in India. According to Harish Bijoor, CEO of Harish Bijoor Consults Inc., a leading
consulting enterprise, "The world is in reality a seamless market for a common
set of products and services, and India cannot stay insulated from this for very
long". For many international players, India as a market is coming of age,
and investing in Indian retail provides them the opportunity to run a profitable
business. "Everyone who hadn't thought of India before because the door was
shut will now move India up from the back burner", said Darshan Mehta, the
Indian Partner for Tommy Hilfiger. |
