Single Brand Retail Companies with stores permitted to sell online

The Department of Industrial Policy and Promotion vide Press Note dated 10th November 2015 announced a slew of FDI reforms across 15 sectors which include Single-Brand Retail and E-commerce.

The highlights of the Press Note are detailed as under:

  1. A manufacturer will be permitted to undertake or sell its product through wholesale and/or retail, including through e-commerce without Government approval;
  2. Sourcing of 30% of the value of goods purchased would be “reckoned from the opening of the first store;
  3. In certain high technology segments, it is not possible for retail entity to comply with the sourcing norms. To provide opportunity to such single brand entities, it has been decided that in case of ‘state-of-art’ and ‘cutting edge technology’ sourcing norms can be relaxed subject to Government approval;
  4. Entities which have been granted permission to undertake Single-Brand Retail Trading i.e. who have been granted license for setting up physical outlets will be permitted to undertake ecommerce activities;
  5. Certain conditions of the FDI policy on the sector namely; products to be sold under the same brand internationally and investment by nonresident entity/s as the brand owner/s or under legally tenable agreement with the brand owner, will not be made applicable in case of FDI in Indian brands;
  6. An Indian manufacturer is permitted to sell its own branded products in any manner i.e. wholesale, retail, including through e-commerce platforms without Government approval. For the purposes of FDI Policy Indian manufacturer would be the investee company, which is the owner of the Indian brand and which manufactures in India, in terms of value, at least 70% of its products in house, and sources, at most 30% from Indian manufacturers. Further Indian brands should be owned and controlled by resident Indian citizens and/or companies, which are owned and controlled by resident Indian citizens.
  7. 100% FDI is to be permitted under automatic route in Duty Free Shops located and operated in the Customs bonded areas.
  8. A single entity will be permitted to undertake both the activities of single brand retail trading and wholesale with the condition that conditions of FDI policy on wholesale/ cash & carry and single brand retail trading have to be complied by both the business arms separately.

These amendments aim at liberalizing and simplifying the FDI policy so as to provide ease of doing business in India.

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