FE Editorial : Signal brand retail
If the year began with the Supreme Court cancelling 122 telecom licences issued by A Raja and throwing the industry into a tizzy—after all many of these had been flipped over at large premiums—it may just end with some good cheer. After summoning the courage to hike FDI limits in single-brand retail, the government even managed to get Parliament to ratify the entry of global multi-brand retailers—all this while not having a majority in the Rajya Sabha. Yet, when it came to clearing Ikea’s R10,500 crore proposal to establish shops in India, the government cleared only a partial list of products that the Swedish retailer could sell. Ikea, however, stood its ground and sent a revised proposal to the government with all the banned products included and, going by the statements made by commerce minister Anand Sharma, the FIPB may just clear this when it meets on December 31.
Indeed, the government has shown great sagacity in the case of rules pertaining to single-brand retail in the past. As per the original rules, single-brand retailers like Ikea would have to source 30% of their produce from SMEs in India; but the definition of SMEs being as restrictive as it was in terms of capital invested, the moment an Ikea developed a supplier who invested in equipment to come to Ikea standards, the supplier would cease to be an SME. When, among others, Ikea pointed this out, the government was quick to dilute the
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