Review of the policy on Foreign Direct Investment- liberalization of the policy in Single-Brand Retail Trading
Government of India
Ministry of Commerce &Industry
Department of Industrial Policy& Promotion
Press Note No.1 (2012Series)
Subject: Review of the policy on ForeignDirect Investment- liberalization of the policy in Single-BrandRetail Trading.
1.0 Present Position:
Foreign Direct Investment (FDI), in retailtrade, is prohibited except in single brand product retail trading,in which FDI, up to 51% is permitted, subject to conditionsspecified under paragraph 22.214.171.124 of 'Circular 2 of 2011-Consolidated FDI Policy'.
2.0 Revised Position:
The Government of India has reviewed theextant policy on FDI and decided that FDI, up to 100%, under thegovernment approval route, would be permitted in Single-BrandProduct Retail Trading, subject to specified conditions, asindicated in paragraph 3.0 below.
3.0 Accordingly, thefollowing amendment is made in 'Circular 2 of 2011- ConsolidatedFDI Policy', dated 30.09.2011, issued by the Department ofIndustrial Policy & Promotion:
3.1 Paragraph 126.96.36.199 issubstituted with the following:
Single Brand product retail trading
(1) Foreign Investment in Single Brandproduct retail trading is aimed at attracting investments inproduction and marketing, improving the availability of such goodsfor the consumer, encouraging increased sourcing of goods fromIndia, and enhancing competitiveness of Indian enterprises throughaccess to global designs, technologies and managementpractices.
(2) FDI in Single Brand product retailtrading 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 thesame brand internationally i.e. products should be sold under thesame brand in one or more countries other than India.
(c) 'Single Brand' product-retailtrading would cover only products which are branded duringmanufacturing.
(d) The foreign investor should be theowner ofthe brand.
(e) In respect of proposals involvingFDI beyond 51%, mandatory sourcing of at least 30% of the value ofproducts sold would have to be done from Indian 'small industries/village and cottage industries, artisans and craftsmen'. 'Smallindustries' would be defined as industries which have a totalinvestment in plant & machinery not exceeding US $ 1.00million. This valuation refers to the value at the time ofinstallation, without providing for depreciation. Further, if atany point in time, this valuation is exceeded, the industry shallnot qualify as a 'small industry' for this purpose. The complianceof this condition will be ensured through self-certification by thecompany, to be subsequently checked, by statutory auditors, fromthe duly certified accounts, which the company will be required tomaintain.
(3) Application seeking permission ofthe Government for FDI in retail trade of 'Single Brand' productswould be made to the Secretariat for Industrial Assistance (SIA) inthe Department of Industrial Policy & Promotion. Theapplication would specifically indicate the product/ productcategories 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 theGovernment.
(4) Applications would be processed inthe Department of Industrial Policy & Promotion, to determinewhether the products proposed to be sold satisfy the notifiedguidelines, before being considered by the FIPB for Governmentapproval.
4.0 The above decisionwill take immediate effect.
5.0 The above provisions willbe incorporated in the next Circular on Consolidated FDI Policy tobe issued on 31.3.2012.
Joint Secretary to the Government ofIndia
D/o IPP File No.: 5/12/2010-FC-1dated: 10th January, 2012
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