Some clearly evident outcomes of this move:
- Increased investments in single brand retail, from leading global brands.
- More employment opportunities in retail sector across levels.
- Best practices in retail, processes etc. that would be brought in by the international brands.
- Growth of Indian SMEs as suppliers, considering the 30 % sourcing norm for wholly owned retailers.
- More employment opportunities in production, manufacturing sector, other sectors that depend on retail industry.
The government on Tuesday, 10th Jan 2012, allowed 100% FDI in single-brand retail, paving the way for global chains in life style , luxury retail, other global brands to have full ownership of their India operations. As of now there was a cap on foreign equity to the extent of 51 % and all these brands had to look for an Indian partner to support their brand in India.
With this new move, single brand retail is definitely going to see more investments. According to a notification by the commerce and industry ministry – this move may also attract investments in production and marketing, improve the availability of such goods for the consumer and encourage sourcing of goods from India.
Until now, global retailers owning a single brand had to look for an Indian partner as the cap on foreign equity was 51 percent. Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) too expressed its satisfaction on the development.
The notified norms for this move among other clauses , makes it clear that the wholly owned international brands would need to source 30 % of their requirements locally. This clearly aims to create more opportunity for suppliers in SME sector.
“The move will not only mean more FDI but lead to employment and also lead to more choices for consumers,” – Rajiv Kumar, secretary general, FICCI.