The Press Note indicating the change in the FDI limit is likely to be out by next week but could contain a few riders along with stringent conditions for granting approvals to such set ups.
The Centre is gearing up to notify 100 per cent foreign direct investment (FDI) in single-brand retail, putting behind the embarrassing saga of FDI in multi-brand retail.
The government is ready to come out with the requisite Press Note and guidelines for 100 per cent FDI in single-brand retail with some riders. The Union Cabinet had on November 24 approved the enhanced limit of single-brand retail to 100 per cent from 51 per cent, clearing the decks for brands like Marks & Spencer, Zara, Ikea, Gap and Armani to open and own showrooms in the country.
It is expected that the Press Note indicating the change in the FDI limit will be out by next week but could contain a few riders along with stringent conditions for granting approvals to such set ups. Foreign investors are already required to own the brand they intend to retail, the brand must be present in other countries and the retailer must source 30 per cent of the products to be retailed from small industries. The guidelines could make it clear that such a condition will not apply to high tech goods that small and medium scale industries cannot manufacture. However, officials said the 30 per cent limit in this case could be hiked to protect the interests of local small units.
The 51 per cent FDI in the single-brand retail sector had not been able to attract many big names as official records point that in the last three and half years only Rs.196-crore FDI had come in through this route. “We are now hopeful that the enhancement of 100 per cent limit will ensure that big names in single-brand will now seek to penetrate the huge potential of the Indian markets in various brands and segments, which will ensure a good flow of FDI into the country,'' a senior Commerce Ministry official said.
According to Minister of State for Commerce and Industry Jyotiraditya Scindia, more than half of the Rs.196 crore came in 2010-11.
The government has already put on hold the decision to allow 26 per cent FDI in the aviation sector. The issue of enhancing the limit in insurance and defence sectors from 26 per cent to 49 per cent is also hanging fire due to objections from various sections of the government.