The government on Tuesday reiterated the extant position that non-resident entities can undertake single-brand retail trading (SBRT) business in India, but clarified that such entities can do so through one or more wholly-owned subsidiaries or joint ventures.
In the clarification on FDI policy on SBRT, the Department of Industrial Policy and Promotion (DIPP) said the FDI policy on SBRT equally applies to Indian brands (and foreign brands) seeking foreign investment. Under the policy, 100% foreign investment is allowed in SBRT, of which 49% is through the automatic route and proposals above that ceiling require government (Foreign Investment Promotion Board) approval.
The DIPP statement reiterated the extant FDI policy on SBRT saying said “a non-resident entity or entities, whether or not the brand owner, can undertake ‘single brand’ retail trading for the specific brand, directly or through a legal agreement with the brand owner”.
The department said the clarification is without prejudice to other conditions of the extant FDI policy on the sector. These include a condition that in proposals involving FDI beyond 51%, sourcing of 30% of the value of goods purchased, need to be from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. Also, retail trading by means of e-commerce would not be permissible for companies with FDI engaged in SBRT.