100% FDI in Single Brand Retail via Automatic Route makes MNCs Happy but Traders Angry!
100% FDI in Single Brand Retail via Automatic Route makes MNCs Happy but Traders Angry!

The Union Cabinet today approved a proposal to allow 100 per cent FDI or foreign direct investment through automatic route in single brand retail. Currently, FDI up to 49 per cent is permitted under automatic route in single brand retail but beyond that limit, government nod is required. The Union Cabinet today reviewed foreign direct investment policy in certain sectors with a view to attract more overseas funds. This move is expected to help retail giants such as Apple, Xiaomi and OPPO in scaling up their Indian operations. The latest policy amendment also MNC retailers can delay having to meet the 30% local sourcing norm by five years, removing a significant stumbling block. Approvals for such investments have also been made automatic. 

 Speaking on the development, Ramesh Kaushik, VP – Brand Experience, Blackberrys, said, “With an expected positive impact on employment, this move should also add more purchasing power and bring larger customer base into the fold. In the prima facie, everyone stands to gain with this move.”

Aashish Kasad, India region tax leader, consumer products and retail, EY India,” “Permitting 100% FDI in single brand retail under the automatic route is another progressive step by the Govt of India towards attracting foreign investment and ease of doing business in India. This should also generate employment and give the Indian consumers access to several international brands. However there was also an expectation of the Government liberalising the FDI norms for multi-brand retail to enable large international retail chains invest in India and bring latest technologies and retail formats into India, which remains an unfinished agenda presently.”

Expressing the similar view, Karan Behal, Founder & CEO, PrettySecrets, said, “In a market like India, which is one the world’s most opportunistic markets, where the retail industry has emerged as one of the most dynamic and fast-paced industries, this news of 100% FDI in single brand retail is one of the most optimistic development.The country will now see the biggest retail players globally enter the Indian shores as individual brands, which would have a greatly positive impact on the economy as a whole. This would also mean the country would now see a lot more retail footprint from brands all over and there’ll be much more buying in the country which is always a good thing for a retail brand."

"I believe this would also be very impactful to lingerie brands within the country as the segment is already at a higher growth rate than apparel and now with this, it would mean the Indian audience would be much more evolved than it currently is," said Karan. 

"We are happy to hear about the India sourcing requirement being offset towards H&M’s global sourcing from India, while it is in the right direction, we look forward to the same relaxation for the period beyond the initials 5 years as well, in view of ease of doing business in India” Janne Einola Country Manager H&M India Retail. 
Speaking on same, Rajesh Jain, Managing Director & Chief Executive Officer - ‎Lacoste-India, said," I dont think this change will have certainly help the brands who are now looking to enter India, but I dont see much impact on already operational brands."

Concerns for small traders

Despite industry rejoicing the move, The Confederation of All India Traders (CAIT) has objected to the government’s move to allow 100 per cent Foreign Direct Investment (FDI) in single-brand retail, saying the decision would lead to an easy entry for multi-national companies and harm domestic trade. 

“It’s a serious matter for small businesses. It is a pity that instead of formulating policies for the welfare, upgradation and modernisation of existing retail trade, the government is more interested in paving way for the MNCs to control and dominate the retail trade of India,” National Secretary General of CAIT Praveen Khandelwal said in a media interaction.


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