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Vrinda \n Oberai <\/i><\/p>\n Vrinda \n Oberai <\/i><\/p>\n
RETAILER, \n New Delhi, January 12, 2012<\/i>
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The \n Manmohan Singh government has finally given its nod for the relaxation \n on the existing 51 per cent FDI in single brand retail, increasing \n it to a much awaited 100 per cent.
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The move has paved way for single brand foreign retailers’ \n to own 100 per cent of their operations in the country, possessing \n fully-owned stores here. However, the decision comes accompanied \n with a rider that 30 per cent of the value of products sold would \n have to be mandatorily sourced from small Indian industries\/village \n and cottage industries, artisans and craftsmen, (collectively \n referred to as ‘suppliers’).
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\n The new policy is advantageous for international players like \n Gap, Starbucks, Adidas, Nike, etc, as it allows them to buy out \n domestic partners and fully own Indian operations. Also, according \n to sources, it is learnt that foreign brands still prefer the \n JV mode or franchise model of doing business in the country. The \n reasons for the same can be many, the immediate ones being a nascent \n luxury market, shooting real estate costs and also, most importantly, \n the knowledge possessed by a local partner.
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\n The new norm is no big game changer for some and this is further \n confirmed by the comment that we received from Marks and Spencer. \n "India is an extremely important market for Marks & Spencer. \n Our journey in India has been exciting so far and our Joint Venture \n partner, Reliance Retail, has helped us transform our position \n in this dynamic market. We have been able to open larger stores \n and realign prices to serve our customers better in India. We \n have also benefited from working with a partner, which has significant \n local experience and expertise in managing logistics. We are very \n happy with our current relationship with Reliance Retail and don’t \n plan to do anything differently following the recent announcements \n on FDI,” commented Martin Jones, CEO, Marks and Spencer Reliance \n India.
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\n Harish Bijoor, Brand Expert and CEO, Harish Bijoor Consults Inc, \n opined, “I do believe this is a positive early signal of \n what is due in multi brand retail. In many ways, this is the trailer \n of the movie to come, hopefully post the assembly elections. This \n will excite single brand retailers. I hope this sends the right \n message to the right retailers.”
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\n The shares of retail firms like Pantaloons Retail, Koutons, Provogue \n India and Shoppers Stop rallied sharply, following the Cabinet’s \n FDI announcement. A positive expectation from the decision is \n that a bolder initiative shall soon follow for FDI in multi-brand \n retail, too. “I think this is a step in the right direction, \n more so as this gives an extremely positive intent as far as the \n government and reforms are concerned. This will now have a snowballing \n effect, going forward in other sectors crying for reforms like \n aviation,” said Sugato Bose, Brand Head, Pure Home+Living.
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\n Bose added, “As far as Indian brands are concerned, I do \n not immediately see any major shakeout of any kind in the immediate \n future. This will only make sense if any Indian brand is looking \n to sell out. On the other hand, we will definitely see renewed \n interest in a lot of international mainstream as well as fringe \n brands to enter the Indian market now.”
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