Lok Sabha Question No. 3463 (UNSTARRED), answered on 2016-08-08
Subject: Policy on Single Brand Retail
Ministry: COMMERCE AND INDUSTRY
Asked by: ABHISHEK SINGH, OM BIRLA

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

## UNSTARRED QUESTION NO. 3463. TO BE ANSWERED ON MONDAY, THE 8 TH   AUGUST, 2016.

## POLICY ON SINGLE BRAND RETAIL

## 3463.  SHRI ABHISHEK SINGH: SHRI OM BIRLA:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज् यवव द्यग ं ्री

- (a) the  details  of  the  guidelines  framed  for  single  brand  retail  business  under  the Foreign Direct Investment (FDI) policy of India;
- (b) whether many international companies/brands have shown interest in opening their single brand outlets in the country;
- (c) if  so,  the  details  thereof  along with the companies/brands that have requested the Government  for  waiver  under  the  local  sourcing clause including the  Apple company, company-wise;
- (d) the details of the companies that have been denied permission for failing to adhere to the 30% local sourcing norms; and
- (e) the steps taken by the Government to reduce subjectivity on discretionary decisions regarding the local sourcing norms  and its waiver related to cutting edge technology?

## ANSWER

## वाणिज् यवव द्यग ााज् यं ्रीस् वतं ््रभााा(स्रींतंरीिरंमलााीरीतंाांि( THE MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF COMMERCE & INDUSTRY (SHRIMATI NIRMALA SITHARAMAN)

- (a): Extant  Foreign  Direct  Investment  (FDI)  Policy  for  undertaking  Single  Brand Retail Trading (SBRT) in India is at Annexure-I .
- (b): Yes, Madam.
- (c) & (d): This Government has since June 01, 2014, approved 20 proposals for foreign investment in the single brand retail trading.    List of companies along with brand name for which single brand retail trading permission has been granted is at Annexure-II.

As per extant FDI Policy on SBRT, in respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will  be  done  from  India,  preferably  from  MSMEs,  village  and  cottage industries, artisans and craftsmen, in all sectors.

FDI Policy on this sector was last amended vide Press Note 5 of 2016 dated 24.6.2016  and  provides  that  in case  of 'state-of-art' and  'cutting-edge technology', sourcing norms can be relaxed subject to Government approval. However,  with  a  view  to  promote  domestic  manufacturing  capacities  and value addition, it has further been provided that this relaxation will be valid for an initial period of three years from the opening of first store, and thereafter, such entities will be required to meet the domestic sourcing norms. There is, thus,  no  provision  for  unqualified  waiver  from  sourcing  condition  in  the  FDI policy.

M/s  Apple  India  Private  Limited,  M/s  Acer  India  Private  Limited,  M/s  Le Ecosystem Technology India Private Ltd., M/s Lenovo (India) Private Limited and  M/s  OPPO  Mobiles  India  Private  Limited  have  sought  relaxation  of sourcing condition. No decision has been taken by the Government.

- (e): The proposals for undertaking SBRT, including those involving issues relating to  relaxation  of  sourcing  conditions  on  account  of  'state-of-art'  and  'cutting edge technology' are examined by Ministries/Departments concerned. Thereafter, Government considers these proposals taking into consideration views and comments of such Ministries/ Departments.

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## ANNEXURE  REFFERED  TO  IN  REPLY  TO  PART  (a)  OF  THE  LOK  SABHA  UNSTARRED QUESTION NO. 3463 FOR ANSWER ON 08.08.2016.

## (Note: Extract from Press Note 5 of 2016, dated 24.06.2016)

## 5.2.15.3 Single Brand product retail trading

| Sector/Activity             | %of Equity/ FDI Cap   | Entry Route                                     |
|-----------------------------|-----------------------|-------------------------------------------------|
| Single Brand Retail Trading | 100%                  | Automatic up to 49% Government route beyond 49% |

- (1)  Foreign  Investment  in  Single  Brand  product  retail  trading  is  aimed  at  attracting investments in production and marketing, improving the availability of such goods for the consumer,  encouraging  increased  sourcing  of  goods  from  India,  and  enhancing competitiveness  of  Indian  enterprises  through  access  to  global  designs,  technologies and management practices.
- (2)  FDI  in  Single  Brand  product  retail  trading  would  be  subject  to  the  following conditions:
3. (a) Products to be sold should be of a 'Single Brand' only.
4. (b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
5. (c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
6. (d) A non-resident entity or entities, whether owner of the brand or otherwise, shall be permitted to undertake 'single brand' product retail trading in the country for the specific  brand,  directly  or  through  a  legally  tenable  agreement  with  the  brand owner for undertaking single brand product retail trading. The onus for ensuring compliance with this condition will rest with the Indian entity carrying out singlebrand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/franchise/sub-licence agreement, specifically indicating compliance with the above condition. The requisite evidence should be filed with the RBI for the automatic route and SIA/FIPB for cases involving approval.
7. (e) In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of  domestic  sourcing  will  be  self-certified  by  the  company,  to  be  subsequently checked,  by  statutory  auditors,  from  the  duly  certified  accounts  which  the company will be required to maintain. This procurement requirement would have to  be  met,  in  the  first  instance,  as  an  average  of  five  years'  total  value  of  the goods  purchased,  beginning  1 st April  of  the  year  of  the  commencement  of  the business i.e. opening of the first store. Thereafter, it would have to be met on an annual  basis.  For  the  purpose  of  ascertaining  the  sourcing  requirement,  the relevant entity would be the company, incorporated in India, which is the recipient

of  foreign  investment for  the purpose  of  carrying  out  single-brand  product  retail trading.

- (f)  Subject  to  the  conditions  mentioned  in  this  Para,  a  single  brand  retail  trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.

(3)  Application  seeking  permission  of  the  Government  for  FDI  exceeding  49%  in  a company which proposes to undertake single brand retail trading in India would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The  applications  would  specifically  indicate  the  product/product  categories which are proposed to be sold under a 'Single Brand'. Any addition to the product/product  categories  to  be  sold  under  'Single  Brand'  would  require  a  fresh approval  of  the  Government.  In  case  of  FDI  up  to  49%,  the  list  of  products/product categories proposed to be sold except food products would be provided to the RBI.

(4) Applications would be processed in the Department of Industrial Policy & Promotion, to  determine whether the proposed investment satisfies the notified guidelines, before being considered by the FIPB for Government approval.

## Note:

(i) Conditions mentioned at Para 5.2.15.3 (2) (b) & 5.2.15.3 (2) (d) will not be applicable for undertaking SBRT of Indian brands.

(ii) An Indian manufacturer is permitted to sell its own branded products in any manner i.e. wholesale, retail, including through e-commerce platforms.

(iii)  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.

(iv)  Indian  brands  should  be  owned  and  controlled  by  resident  Indian  citizens  and/or companies which are owned and controlled by resident Indian citizens.

(v) Sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of products having 'state-of-art' and 'cutting-edge' technology and where local sourcing is not possible. Thereafter, provisions of Para 5.2.15.3 (2) (e) will be applicable.

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## ANNEXURE REFFERED TO IN REPLY TO PART (c) & (d)  OF THE LOK SABHA UNSTARRED QUESTION NO. 3463 FOR ANSWER ON 08.08.2016.

## List of proposals approved under Single Brand Retail Trading since June 1, 2014.

|   S.N. | Name of the (i) applicant (ii) foreign investor      | Brand and Date of Approval   | Approved foreign equity participation in%   |
|--------|------------------------------------------------------|------------------------------|---------------------------------------------|
|      1 | M/s Bulgari International Corporation (BIC) N.V.     | BVLGARI 25.7.2014            | 51%                                         |
|      2 | M/s Luxury Lifestyle Trading India Pvt. Ltd.         | Luxury 30.7.2014             | 100%                                        |
|      3 | M/s Innisfree Cosmetics India Pvt Ltd.               | Innisfree 29.09.2014         | 100%                                        |
|      4 | M/s Bestseller United Singapore Pte Ltd.             | Vero Moda 12.11.2014         | 100%                                        |
|      5 | M/s Bestseller United Singapore Pte Ltd.             | Jack & Jones 12.11.2014      | 100%                                        |
|      6 | M/s Lush Limited                                     | Lush 12.11.2014              | 100%                                        |
|      7 | M/s Bestseller United Singapore Pte Ltd.             | Only 13.11.2014              | 100%                                        |
|      8 | M/s Wacoal International Hong Kong Co. Ltd.          | Wacoal 13.04.2015            | 51%                                         |
|      9 | M/s Montblanc Services B.V                           | Montblanc 08.06.2015         | 51%                                         |
|     10 | M/s Forever Living Imports (India) Private Limited   | Forever 08.06.2015           | 100%                                        |
|     11 | M/s Technocorp Holding Limited                       | Swatch 03.08.2015            | 100%                                        |
|     12 | M/s Swarovski International Holding AG, Switzerland  | Swarovski 30.09.2015         | 100%                                        |
|     13 | M/s adidas AG, Germany                               | Adidas 03.11.2015            | 100%                                        |
|     14 | M/s Ryohin Keikaku Co. Ltd, Japan                    | MUJI 10.12.2015              | 51%                                         |
|     15 | M/s Kiko International S.R.L, Italy                  | KIKO 28.04.2016              | 51%                                         |
|     16 | M/s Skechers Retail India Private Limited            | SKECHERS 03.05.2016          | 51%                                         |
|     17 | M/s Nike India Private Limited                       | NIKE 20.05.2016              | 100%                                        |
|     18 | M/s Austria Puma Dassler Gesellchaft m.b.H, Austria. | PUMA 24.05.2016              | 100%                                        |
|     19 | M/s Tommy Hilfiger Arvind Fashion Private Limited.   | Tommy Hilfiger 20.07.2016    | 50%                                         |
|     20 | M/s adidas India Marketing Private Limited.          | Adidas 26.07.2016            | 100%                                        |

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