Lakshmi Kumaran & Sridharan AttorneysAn ISO 9001 / 27001 certified law firm

FDI upto 100% permitted in single brand retail trading

12th January, 2012

The policy on foreign direct investment in single-brand retail trading has been amended by the Indian Government. Changes permitting 100% FDI in single-brand retail trading sector have been notified on 10th January 2012. FDI upto 100% will be allowed in this sector under government approval route.  

The official note states that the policy change 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.  

The conditions in the earlier policy like sale of products under single brand, sale of products under same brand internationally, coverage of only those products which are branded during manufacture and foreign investor to be the owner of brand, have been retained.  

The Press Note 1 (2012) also imposes certain additional conditions. For proposals beyond 51% FDI, mandatory sourcing of at least 30% of the value of products sold shall be made from Indian ‘small industries/ village and cottage industries, artisans and craftsmen’. Such condition shall be complied with by self-certification by the company and to be verified subsequently by statutory auditors.  

Applications shall be filed with Secretariat for Industrial Assistance (SIA) in the DIPP and it should specifically indicate the product/ product categories which are proposed to be sold under a ‘single brand’. Any addition to the product/ product categories to be sold under ‘single brand’ would require a fresh approval of the Government.  
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