Feedback
A pioneer B2B media and publication platform connecting with Fashion Brands & Retail in India

Despite FDI relaxations, single brand retailers choose local partners for India

The Department for Promotion of Industry and Internal Trade (DPIIT) recently clarified that single brand retailers, owned by foreign companies, can fulfill their local sourcing requirements by procuring goods produced in units based in special economic zones (SEZs). It further clarified these goods to be sourced by the single brand retailers need to be manufactured in India.

India allows 100 per cent FDI for single brand retail. However, till 2018, these firms needed DPIIT’s permission to invest above 49 per cent in this sector. In 2019, the government amended the FDI policy to allow single brand retailers to set up their online operations without having a physical store in the country. This enables retailers to test the market before making large investments.

The amendment also stated that foreign retailers with more than 51 per cent FDI in the fashion sector need to source a minimum 30 per cent of the value of purchased goods domestically. However, they can meet this requirement incrementally within the first five years of operations in India.

Regardless of these new amendments, foreign retailers are not too keen to invest in India as the government does not support them in either procuring land and local sourcing or setting up their manufacturing facilities. Lack of skilled labour and weak infrastructure also dissuade them from investing in India’s single brand retail sector. Lack of supply chain, skilled labor prevents brands from shifting production.

The Indian retail sector has been attracting foreign investments through such intermittent relaxations in the last five years. This has enabled globally known retailers like H&M, Starbucks, Walmart, Nokia, Sony, and IKEA to establish and reinforce their presence in India

Licensing agreements over FDIs

In the past, single brand retailers, such as Zara and Marks & Spencer, have partnered Indian retail conglomerates through license agreements instead of taking the FDI route. For instance, Forever 21 recently filed for bankruptcy in the US – with plans to exit international locations in Asia and Europe. However, its India operations, will continue but as a franchise operation run by Aditya Birla Fashion and Retail.

Despite these much-touted relaxations, several single-brand retailers might prefer entering the Indian market through partnerships as it gives them access to local expertise in navigating India’s highly segmented though vast market.

LATEST TOP NEWS
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10

India records biggest surge in e-commerce retail

India records biggest surge in e-commerce retail

A study conducted by Facebook India and Boston Consulting Group recently recorded the sharpest surge in e-commerce adoption across multiple categories in India compared to other markets, including China, Brazil,... Read more

350 retailers threaten to shutter outlets

350 retailers threaten to shutter outlets

Retailers of around 350 brands including DLF, Ambience Nexus, Pacific Group, Oberoi, Mantri have threatened to shutter outlets in shopping centres if their demands for rent-waivers and new rental agreements... Read more

DFU Live Webinar #3: highlights growing demand for loungewear post Covid-19

DFU Live Webinar #3: highlights growing demand for loungewear post Covid-19

The webinar #3 organized by DFU Publications-DFU LIVE on May 30 on the theme: ‘New Categories Dikhao, Sales Badhao’ (Emerging New Categories for Apparel Retailers, Post-Covid), saw experts stressing on the significant... Read more

Kidswear market to grow at CAGR of 17.9 per cent till 2023

Kidswear market to grow at CAGR of 17.9 per cent till 2023

Euromonitor India predicts, children’s wear market for ages 0-14 years in the country is projected to grow at a compounded annual rate of 17.9 per cent from 2018 to 2023.... Read more

Consumer psyche to witness a paradigm shift post-COVID-19: LIVA study

Consumer psyche to witness a paradigm shift post-COVID-19: LIVA study

For any retailer, it is important to be compassionate towards consumer’s thoughts and feelings. With this in focus, LIVA, an ingredient fabric brand from the Aditya Birla Group alongwith MRM,... Read more

CMAI requests government to levy additional import duty on RMG imports

CMAI requests government to levy additional import duty on RMG imports

The Clothing Manufacturers Association of India (CMAI) has written to the Minister of Textiles Smriti Zubin Irani, and the Minister of Commerce and Industry Piyush Goyal to consider levying a... Read more

India’s activewear market to reach Rs 997.8 billion by 2024

India’s activewear market to reach Rs 997.8 billion by 2024

A report titled, ‘Activewear Market in India 2019’ by ResearchAndMarkets.com, says the activewear market is estimated to reach Rs 997.8 billion by 2024, expanding at a CAGR of ~13.59 per... Read more

DFU Live Webinar #2: Highlights challenges to lure reluctant customers back to s…

DFU Live Webinar #2: Highlights challenges to lure reluctant customers back to stores

The Webinar #2 organized by DFU Publications-DFU LIVE in association with TRRAIN on the theme: ‘Consumer Bulao, Retailer Jitao’ (Spiking Consumption, Winning the Customer Back), saw experts highlighting the challenges involved... Read more

Indian apparel players gear up for the new normal

Indian apparel players gear up for the new normal

With the pandemic impacting both apparel manufacturers and retailers in India, these industry players are preparing themselves for the new normal. Speaking at a recent webinar by the Retail Association... Read more

CMAI welcomes economic package announced by the finance minister

CMAI welcomes economic package announced by the finance minister

CMAI has welcomed the measures announced by Nirmala Sitharaman, Finance Minister, especially those connected with the Government’s support to the MSME Sector – on which she focused on today. According to... Read more

MOST POPULAR NEWS
Go to top

Follow Us On:

Face BookDealersForYou

TWDFUpublications

LNDFUpublications

YouTubeDFUpublications

 Copyright © 2020 DFU Publications. All rights reserved.