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The Department of Industrial Policy and Promotion (DIPP) ON 10
January 2012 notified the rules allowing 100% foreign direct investment
(FDI) in single-brand retail. Currently 51% FDI is permitted in this
segment of retailing which was opened to foreign players almost six
years ago.
Removal of the investment cap will help global fashion brands, especially from Italy and France, to venture alone in the growing Indian market.
Shares of retail giants Kishore Biyani-led Future Group firm Pantaloon Retail (India) surged by 10% to an early high of Rs 161.40, while Provogue (India) zoomed up by 14.22% to Rs 28.10 on the BSE following the announcement by the government. In a similar fashion, Koutons Retail gained 12.52%, Shopper's Stop rose by 9.38%, Tata Group retail venture Trent Ltd advanced by 5.50% and Vishal Retail jumped by 4.98%.
The decision to increase FDI in single-brand retail was taken by Cabinet on 24 November 2011 along with the decision to open the gates for overseas investment in multi-brand retail. The government was however forced to put FDI in multi-brand retail on hold in the face of opposition by several political parties, including UPA ally Trinamool Congress.
In respect of proposals involving FDI beyond 51%, the mandatory sourcing of at least 30% would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of USD 1 million (about Rs 5 crore).
Removal of the investment cap will help global fashion brands, especially from Italy and France, to venture alone in the growing Indian market.
Shares of retail giants Kishore Biyani-led Future Group firm Pantaloon Retail (India) surged by 10% to an early high of Rs 161.40, while Provogue (India) zoomed up by 14.22% to Rs 28.10 on the BSE following the announcement by the government. In a similar fashion, Koutons Retail gained 12.52%, Shopper's Stop rose by 9.38%, Tata Group retail venture Trent Ltd advanced by 5.50% and Vishal Retail jumped by 4.98%.
The decision to increase FDI in single-brand retail was taken by Cabinet on 24 November 2011 along with the decision to open the gates for overseas investment in multi-brand retail. The government was however forced to put FDI in multi-brand retail on hold in the face of opposition by several political parties, including UPA ally Trinamool Congress.
In respect of proposals involving FDI beyond 51%, the mandatory sourcing of at least 30% would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of USD 1 million (about Rs 5 crore).
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