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H&M's India entry hit by FDI’s sourcing norm hurdle

By FashionUnited

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After reports of Swedish retail chain Hennes

& Mauritz (H&M) firmed plans of entering India, its FDI proposal seems to have hit a roadblock owing to manadatory sourcing norms of India’s FDI policy. As per sources, five months after H&M filed its application to invest about Rs 700 crores in setting up single-brand retail stores in India, the government has asked it to clarify on its commitment to comply with the mandatory 30 percent sourcing and on the licence agreement for its brand use here.

The H&M proposal to go with 100 percent FDI in India follows after Ikea's 1.5-billion dollars (Rs 9,474 crores) proposal, which was cleared by the Cabinet earlier this year. H&M may actually invest a much amount than 100 million dollars (over Rs 600 crores), according to its April 18 application to FIPB.

After the government allowed up to 100 percent FDI in single brand retail, many global brands were keen to enter the developing lucrative market but the 30 percent mandatory sourcing rule along with a dilemma over sub brands forced them to hold their plans. The Cabinet is now trying to resolve their issues to attract investment in the country.
H&M