Department of Industrial Policy and Promotion Ministry of Commerce and Industry notified the decision to allow 100 per cent FDI in Single brand retail on 10th January 2012 via Press Note No.1 (2012 Series).
The Union Minister for Commerce Industry and Textiles said “Cabinet took the conscious decision to liberalise policy for FDI in single brand retail. FDI in single brand has led to emergence of some global majors in Indian market. We have now allowed Foreign Investment up to 100 percent with the stipulation that in respect of proposals involving FDI beyond 51 per cent there will be mandatory sourcing of at least 30 per cent of the total value of the products sold would have to be done from Indian ‘small industries/village and cottage industries, artisans and craftsmen, This step will provide stimulus to domestic manufacturing value addition and help in technical upgradation of our local small industry.”
Currently up to 51% Foreign Direct Investment (FDI) is permitted in single brand product retail trading, where as FDI is prohibited in retail trade.
Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.
FDI in Single Brand product retail trading would be subject to the following conditions:
- Products to be sold should be of a ‘Single Brand’ only.
- Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
- ‘Single Brand’ product-retail trading would cover only products which are branded during manufacturing.
- The foreign investor should be the owner of the brand.
- 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. The compliance of this condition will be ensured through self-certification 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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