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54
T H E P R I M E R U S P A R A D I G M
Shweta Saxena
Aradhana Prabhakar
India is the third largest economy in
the world ­ and stability coupled with
consistent growth of such a large con-
tributor to the global economy is not an
easy task. The Indian government has
been consistent in its support for market
development through trade liberalization,
financial liberalization, taxation reforms
and opening up to foreign investments.
India's twin growth engines of economic
growth and demographic profile set it
apart from other nations and present
a compelling business case for global
retailers looking to enter the Indian
market. In its endeavors to encourage
foreign investments in India, the Depart-
ment of Industrial Policy and Promotion
("DIPP") of the Ministry of Commerce
and Industry see Press Note No. 1 (2012
Series) dated January 10, 2012 ("PN
1")
1
, has permitted 100 percent Foreign
Direct Investment ("FDI") in single
brand product retail trading under the
Government route ( i.e. with the prior
approval of the Secretariat for Industrial
Assistance and the Foreign Investment
Promotion Board).
Prior to PN 1, up to 51 percent was
allowed in the single brand retail sector.
But with the recent 100 percent limit
relaxation, entry in the Indian markets
has become a very lucrative opportunity
for global as well as domestic market
players. The retail industry in India
is of late often being hailed as one of
the sunrise sectors in the economy. By
relaxing the FDI laws relating to single
brand retailing, the Indian government
has definitely created a positive step
forward, paving the way for foreign
retailers selling single branded products
to move into India without having to join
with an India partner.
Background
Prior to the PN 1, FDI in single brand
product retail trading was allowed up to
51 percent under the government route.
Further, prior to PN 1, FDI in single
brand product retail trading under the
FDI policy was 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. prod-
ucts should be sold under the same
brand in one or more countries other
than India.
·
`Single Brand' product-retailing
would cover only products which are
branded during manufacturing.
·
The foreign investor should be the
owner of the brand.
PN 1, with the 100 percent FDI
infusion in single brand product retail
trading under the government route, has
Boon for Single Brand Retailing in India ­
Relaxation in Foreign Direct Investment Norms
Asia Pacific
Shweta Saxena is a Senior Associate with Advani & Co., specializing
in the areas of corporate commercial, corporate transactional and
advisory, banking and the financial sector.
Advani & Co. Barristers-at-Law
10, Thakur Niwas, Level 2
173, Jamshedji Tata Road
Mumbai, 400020 India
+ 91 22 22818380 Phone
+ 91 22 22865040 Fax
shweta.saxena@advaniandco.com
www.advaniandco.com
Advani & Co. Barristers-at-Law
10, Thakur Niwas, Level 2
173, Jamshedji Tata Road
Mumbai, 400020 India
+ 91 22 22818380 Phone
+ 91 22 22865040 Fax
aradhana.prabhakar@advaniandco.com
www.advaniandco.com
Aradhana Prabhakar is a Partner with Advani & Co., specializing
in the areas of arbitration ­ international and domestic, corporate
commercial, corporate advisory, real-estate advisory and regulatory.