The Indian cabinet approved 100 percent foreign direct investment in single-brand retail through the automatic route. Earlier, foreign retailers looking to invest more than 49 percent required the government’s nod.
India also allowed single-brand retailers to set off the value of goods sourced from India for their global operations against the 30 percent mandatory sourcing requirement for India operations in the first five years, according to a government press statement. Thereafter, they will be required to meet the 30 percent local sourcing norms.
The move to allow FDI through the automatic route makes little difference since most single-brand retailers like Zara, Nautica, Gant, Benetton and many others have already opened their stores in India, said Sandeep Jain, executive director at Monte Carlo Fashions.
“I do not see much fresh investment coming into India because of this since most large brands have already come through the approval route.”