Department of Industrial Policy and Promotion Ministry of Commerce and Industry notified the decision to allow 100 per cent FDI in Single brand retail today via Press Note No.1 (2012 Series). The Union Minister for Commerce Industry and Textiles said “Cabinet took the conscious decision to liberalise policy for FDI in single brand retail. FDI in single brand has led to emergence of some global majors in Indian market. We have now allowed Foreign Investment up to 100 percent with the stipulation that in respect of proposals involving FDI beyond 51 per cent there will be mandatory sourcing of at least 30 per cent of the total value of the products sold would have to be done from Indian ‘small industries/village and cottage industries, artisans and craftsmen, This step will provide stimulus to domestic manufacturing value addition and help in technical upgradation of our local small industry.”

The Press Note No.1 (2012 Series) of DIPP can be seen below:-

Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC-I Section)

Press Note No.1 (2012 Series)

Subject:           Review of the policy on Foreign Direct Investment- liberalization of the policy in Single‑
Brand Retail Trading.

1.0       Present Position:

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’.

2.0       Revised Position:

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, as indicated in paragraph 3.0 below.

3.0        Accordingly, the following amendment is made in ‘Circular 2 of 2011- Consolidated FDI Policy’, dated 30.09.2011, issued by the Department of Industrial Policy & Promotion:3.1     Paragraph 6.2.16.4 is substituted with the following:

6.2.16.4

Single Brand product retail trading      100%                             Government
(1)   Foreign Investment in Single Brand product retail trading is aimed at attracting       investments     in         production       and      marketing, improving      the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.(2)      FDI    in Single   Brand  product   retail trading would     be subject to the following conditions:

(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.

(3)      Application seeking permission of the Government for FDI in retail trade of ‘Single Brand’ products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a ‘Single Brand’. Any addition to the product/ product categories to be sold under ‘Single Brand’ would require a fresh approval of the Government.

(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval.

Sd/-

4.0      The above decision will take immediate effect.

5.0      The above provisions will be incorporated in the next Circular on Consolidated FDI Policy to be issued on 31.3.2012.

(Anjali Prasad)
Joint Secretary to the Government of India

D,’o IPP File No.: 5,’12,’2010-FC-I dated: 10th January, 2012

Copy forwarded to:

1.      Press Information Officer, Press Information Bureau- for giving wide publicity to the above Press Note.
2.      BE Section in the Department of Industrial Policy and Promotion- for uploading the Press Note on DIPP’s website.

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