Single-brand retailers now easier to enter India
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Indian Prime Minister Narendra Modi has removed the need for a federal approval of foreign single-brand retailers entering India.
He has also relaxed the rule mandating 30 per cent local sourcing giving companies five years to reach the threshold.
The surprise moves will speed the launch of at least 10 foreign brands believed to have applications in processing at present, including Uniqlo parent Fast Retailing and Tesla, according to a report in the Times of India. Fast Retailing had lodged an application to open Uniqlo stores last November, and Tesla has been in talks with government officials.
“There are around 10 applications under single-brand retail trading and these will be positively impacted once the amendments in the FDI policy are notified,” Suresh Prabhu, Commerce and Industry Minister said without revealing brand names.
Apple may be another foreign company to benefit from the about-face. The US tech giant had a previous application to enter the country via its own Apple stores declined because it could not meet local content requirements.
Foreign brands have long been frustrated by Indian government restrictions on single-brand retailers, which were effectively designed to protect the ‘unorganised’ domestic retail sector, dominated by ma-and-pa retailers.
Modi is trying to stimulate the Indian economy by relaxing foreign investment rules in a number of sectors, even allowing overseas companies to take a stake in the national carrier Air India.
Questions & Answers
Q.Which specific restrictions has the Indian Prime Minister removed or relaxed for single-brand retailers?
Which specific restrictions has the Indian Prime Minister removed or relaxed for single-brand retailers?
The Prime Minister has removed the requirement for federal approval for foreign single-brand retailers entering India. He has also relaxed the 30 per cent local sourcing rule, giving companies five years to meet the threshold.
Q.Which companies are mentioned as potentially benefiting from the changes to India's retail rules?
Which companies are mentioned as potentially benefiting from the changes to India's retail rules?
Uniqlo parent Fast Retailing and Tesla are believed to have applications pending and may benefit. Apple, whose previous application was declined due to local content requirements, could also benefit from the relaxed rules.
Q.What was the previous reason for Apple's application to open its own stores in India being declined?
What was the previous reason for Apple's application to open its own stores in India being declined?
Apple's previous application to enter India via its own stores was declined because the company could not meet the country's local content requirements. This was a common frustration for foreign brands.
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