The Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government of India (DIPP) for the purpose of attracting investment 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 has vide Press Note 1 of 2012 dated January 10, 2012 increased the threshold limit of Foreign Direct Investment (FDI) in Single Brand Retail from 51% to 100%.

The same is subject to the satisfaction of the following conditions:

  1. Products to be sold should be of a 'Single Brand' only.
  2. 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.
  3. 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
  4. The foreign investor should be the owner of the brand.
  5. In respect of proposals involving FDI beyond 51%, at least 30% of the value of products sold would have to be mandatory sourced from Indian 'small industries/ village and cottage industries, artisans and craftsmen'.

    For the purpose of this clause, 'Small industries' has been defined as industries which have a total investment in plant and machinery not exceeding USD 1,000,000.

    The aforementioned valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, the said valuation is exceeded, the industry will cease to qualify as a 'small industry' for the purpose of this clause. 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.
  6. An 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 DIPP. The application would need to 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.
  7. Applications would be processed by DIPP, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the Foreign Investment Promotion Board for Government approval.

    This Press Note will take immediate effect and Paragraph 6.2.16.4 of Circular 2 of 2011 – Consolidated FDI Policy will be substituted accordingly.

    The Cabinet Ministers on November 24, 2011 had approved 51% FDI in Multi-Brand Retail and increased the threshold limit of FDI in Single Brand Retail from 51% to 100%. While the increase in the threshold limit in FDI in Single Brand Retail has been duly notified pursuant to Press Note 1 of 2012, FDI in Multi- Brand Retail is yet to see the light of the day.

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