INDIA BUSINESS WORLD - FEBRUARY 2006
THE MONTH THAT WAS

NEW RULES FOR FDI IN BRANDED RETAIL

Paving the way for foreign direct investment (FDI) to flow into branded retail, the government has issued guidelines that will govern such investments. Rules have also been issued for permitting FDI in a number of areas –– greenfield airports, distillation and brewing of potable alcohol, manufacture of industrial explosives and hazardous chemicals, laying of natural gas/LNG pipelines and cash-andcarry wholesale trading –– through the automatic routes. The rules give effect to the decisions taken recently by the Union Cabinet and the group of ministers on FDI, headed by agriculture minister Sharad Pawar.

The rules for FDI in branded retail permit multinational companies to offer multiple products under a single brand with prior government approval. The norms allow up to 51% in retail trade of single brand products would cover only those that are sold under the same brand internationally and are branded during manufacturing.

Applications for retail FDI would have to specifically indicate ‘the product or product categories which are proposed to be sold' in the retail outlets that would be set up by the applicant-company. ---“Any addition to the product or product categories to be sold under single brand would require a fresh approval of the government,” according to the rules issued by department of industrial policy and promotion