Government permits 100% FDI in Single-Brand Retail Trade

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Government permits 100% FDI in  Single-Brand Retail Trade


Finally, the Department of Industrial Policy and Promotion (DIPP), vide its Press Note No. 1 of 2012 dated January 10, 2012, has finally permitted 100% FDI in Single Brand Retail Trade under Government approval as against the current limit of 51% FDI. Earlier Foreign Direct Investment (FDI), in retail trade in single brand product retail trading was up to 51% is permitted, subject to certain conditions.

The Government of India has reviewed the extant policy on FDI and decided that FDI, up to 100%, under the government approval route, would be permitted in Single-Brand Product Retail Trading, subject to specified conditions, as detailed below.

(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally l.e. products should be sold under the same brand in one or more countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian 'small industries/ Village and cottage industries, artisans and craftsmen'. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. 'Village industry' shall have the meaning as defined under the Khadi and Village Industries Commission Act, 1956, as amended from time to time. The compliance of this condition will be ensured through selfcertification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be
required to maintain.

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