Industry Hopes for Easier FDI Norms in Multi Brand Retail

“In line with 100% FDI in food retail, a similar policy could be considered for multi-brand retail in products that can be fully manufactured in and sourced from India,” the Federation of Indian Chambers of Commerce and Industry, told Finance Minister Nirmala Sitharaman .

The debate over allowing easier foreign direct investment (FDI) norms for multi-brand retail has arisen once again. According to Finance Minister Sitharaman, multi-brand trading wasn’t going to be possible before farmers and retailers provided enough resources to face market competition.

Currently, the foreign direct investment policy concerning Indian multi-brand retail companies permits 51 per cent stake in the sector. BJP, in its election manifesto, had opposed overseas investment in the retail sector. Trader bodies remain opposed against any steps towards further liberalizing the retail sector for FDI.

While, 100 per cent foreign direct investment under the automatic route was allowed in single-brand retail last year, FDI in multi-brand continues to be restricted. Those opposed to total freedom in FDI policies worry that opening the door to giant foreign investors may drive away consumers from their tiny outlets and departmental stores.

So far, only one big foreign player, Tesco, has received approval from the UPA government for opening stores under the multi-brand retail policy.

What is a single- brand and multi-brand retail store or chain?

Under the single- brand multi retail store, products only under a single label are sold across all the stores. Take the example of Nike, Starbucks and Ikea.

Under a multi-brand store, different brands are sold under one roof. Just like Walmart’s and big bazaars of the world. In June this year, the government had allowed 100 per cent FDI under government approval route for trading, including through e-commerce, with respect to food products manufactured in the country.