Nike seeks govt nod to open fully owned stores in India

Sep 02 2014, 12:30 IST
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Nike entered India in mid-90s through an exclusive licensing agreement with Sierra Enterprises. Nike entered India in mid-90s through an exclusive licensing agreement with Sierra Enterprises.
SummaryAmerican sportswear manufacturer Nike has approached the DIPP...

American sportswear manufacturer Nike has approached the Department of Industrial Policy and Promotion (DIPP), seeking a go-ahead to open fully owned stores under the single-brand retail foreign direct investment (FDI) policy.

Nike India Pvt Ltd, subsidiary of the US-based parent company, applied to the DIPP on August 29, “for 100 per cent FDI to undertake single-brand retail trading in India related to accessories, apparel accessories and equipment,” a source said. Nike currently owns stores in India through franchisees. According to the existing policy, 100 per cent FDI is allowed in the single-brand retail segment — 49 per cent on automatic route and beyond that through the Foreign Investment Promotion Board (FIPB).

Last year in October, in an investor update meeting, Nike president and CEO Mark Parker had said that emerging markets is the third largest geography for the company and is expected to continue to grow “at a mid-teens rate, reaching over $6.5 billion in revenue by fiscal year 2017”, according to a presentation on the website of the company. Nike entered India in mid-90s through an exclusive licensing agreement with Sierra Enterprises but now has a wholly owned subsidiary, Nike India.

Ever since the FDI policy was liberalised by the government in 2012, Swedish furniture-maker Ikea, French fashion brand Promod, crockery maker Le Creuset and sports giant Decathlon, Fossil Inc, British footwear retailer Pavers England, US luxury clothing retailer Brooks Brothers and Italian jewellery maker Damiani have already got a nod from the FIPB. So far, the biggest single-brand retail proposal cleared by the government came from Ikea. The company will invest Rs 10,500 crore to open 25 stores in India in the next 10 years.

The NDA government, though opposed to FDI in the multi-brand retail segment, has been promoting and relaxing norms for sectors like defence, railway infrastructure, and construction.

Single-brand retail FDI

Nike India Pvt Ltd, subsidiary of the US-based parent company, applied to the DIPP on August 29, for 100 per cent FDI to undertake single-brand retail trading in India

Nike entered I Nike entered India in mid-90s through an exclusive licensing agreement with Sierra Enterprises

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