100% Foreign Direct Investment in Single Brand Retail for India – Quick Guide and Summary

The Indian government has allowed 100% Foreign Direct Investment (FDI) in Single Brand Retail Stores up from 51% earlier. Note earlier the government had tried to raise the investment limit in multi brand retail which would have boosted Wal-Mart, Tesco and others which have been trying to get into the lucrative Indian market for a long time. However stiff opposition from a number of Indian political parties had scuttled the move .The government has however moved in the Single Brand Retail which is not as contentious and poses as big a risk to the millions who work in India’s massive Retail Industry.

The Key Points of this legislation are

1)  Products by the global chains should be of ‘single brand’ only and be sold under the same brand internationally.

2) Mandatory sourcing of at least 30 per cent would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of $1 million (about Rs 5 crore).

3) Foreign Direct Investment (FDI), up to 100 per cent, under the government approval route, would be permitted in single brand product retail trading

The companies which will benefit are big single brands from the West like Adidas,Nike who have not expanded aggressively in India due to the limited capital of its local partners which have a 49% stake. Now these big retail brands will be able to put in capital without limit to expand.