Department of Industrial Policy
and Promotion Ministry of Commerce and Industry on 10th January
2012, notified the decision to allow 100 per cent FDI in Single brand retail via
Press Note No.1 (2012 Series).
Presently Foreign Direct
Investment (FDI), in retail trade, is prohibited except in single brand product
retail trading, in which FDI, up to 51% is permitted, subject to conditions
specified under paragraph 6.2.16.4 of 'Circular 2 of 2011- Consolidated FDI
Policy'. The Government of India has reviewed the extant policy on FDI and
decided that FDI, up to 100%, under the government approval route, would be
permitted in Single-Brand Product Retail Trading, subject to specified
conditions.
The conditions are:
(a) Products to be sold should be
of a 'Single Brand' only.
(b) Products should be sold under
the same brand internationally i.e. products should be sold under the same
brand in one or more countries other than India.
(c) 'Single Brand' product-retail
trading would cover only products which are branded during manufacturing.
(d) The foreign investor should
be the owner of the brand.
(e) In respect of proposals
involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of
products sold would have to be done from Indian 'small industries/ village and
cottage industries, artisans and craftsmen'. 'Small industries' would be
defined as industries which have a total investment in plant & machinery
not exceeding US $ 1.00 million. This valuation refers to the value at the time
of installation, without providing for depreciation. Further, if at any point
in time, this valuation is exceeded, the industry shall not qualify as a 'small
industry' for this purpose. The compliance of this condition will be ensured
through self-certification by the company, to be subsequently checked, by
statutory auditors, from the duly certified accounts, which the company will be
required to maintain.
Click
here to view the Press Note
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