FDI in single brand retail gets cold response

While global brands once lined up to enter India through FDI policy in single-brand retail, the data shows that the overall response has not been very encouraging with the segment receiving only 135 million dollars (around Rs 700 crores) worth of proposals in the last nine years. On the other hand, one proposal from Tesco, in multi-brand retail alone saw an investment of 140.3 million dollars (Rs 850 crores).

Experts say that despite the government raising FDI limit to 100 percent, mandatory sourcing from Indian SMEs and branding retail issues poses a hurdle to their entry. From 2006-07 to 2014-15 over 80 proposals were received under single-brand FDI, which included Brooks Brother, a UK-based shoe firm, Pavers England and Burberry International Holdings, which were all cleared by the government.

In February 2006, 51 percent FDI was permitted in single-brand retail. In January 2012, the government raised the cap to 100 percent. FDI up to 49 percent was allowed under the automatic route, but beyond that, the government approval was required. Currently, 51 percent FDI is permitted in multi-brand retail.