Many foreign brands are trying to gain from the Indian FDI policy liberalisation. Levi Strauss & Co, makers of popular Levi’s jeans, has sought the government’s permission for converting its existing local wholesale entities into retail.
On April 11, the US-headquartered company had filed an application with the Department of Industrial Policy & Promotion (DIPP) to seek approval for its existing wholesale entities to engage in direct retailing and ecommerce. DIPP is the nodal agency for FDI in India. As per Indian regulations single-brand retailers were allowed to set up their own stores but they had to set up wholesale subsidiaries to supply to their chain of franchisees. As a result, this made things complicated as companies had to set up separate entities for retail and wholesale with different warehousing, inventory and accounting.
Many brands such as Pepe Jeans, Adidas and Puma have already applied for similar permissions. Pepe is looking at setting up large-format company-owned stores while Puma plans to operate its own e-commerce portal.
It was in November 2015 that the government of India relaxed the rules of FDI in retail, thus permitting manufacturers to sell their products through wholesale, retail and e-commerce channel as well. Retailers believe that policy change will help streamline business operations by bringing efficiency in supply chain, inventory management, sourcing and generating employment in retail industry.