Significance of FDI in Single Brand Retail Industry

in Retail

 

Government of India has passed a resolution, which allows 100% Foreign Direct Investment into the single brand retail industry. This has been accepted and appreciated by many international branded companies that now get an opportunity to sell their products directly to Indian consumers. Market is expected to flourish with many fashionable single branded products at a very competitive price.

As per the rule, these companies can have their own stores, or could opt for partnership deeds, joint venture and others. Today, many countries like France, Sweden, Germany, and the United States of America are competing amongst themselves to launch their product line for the various Indian customers.

Imagine purchasing a wristwatch manufactured in Sweden, a pure Irish coffee, fashion apparels manufactured by one of the French fashion companies, and others offering you taste of International market at cheaper prices. Single brand retail management changes the scope of sales, advertising, and production off goods for consumers.

Foreign Direct Investment in multi branded products has been fixed to a maximum of 51%. Government has drafting new policies and techniques for promoting retail industry, in order to attract many foreign countries to open their franchise in the country

The government has also laid a condition that these foreign set ups should be sourced from at least 30% from Indian small and medium business houses. The SMEs are defined as one whose capital in terms of machinery and others should not be more than $1 million at the time of valuation. This would promote healthy competition amongst the owners of top most branded products.

Retail industry is considered to one of the highest employment generating sectors for the country, which increases the per capita income, national income, and controls inflation rate. All these factors lead for a faster and steady economic growth of the country.

Consumers are now happy, as they get more options to shop internationally branded products at the best prices. Increasing purchasing power parity and fast economic growth has allured many international investors. It also gives an opportunity to many Indians to access the International technology, and styles.

Any investor could be the owner of a brand he wants to launch in the country. The retail Industry rule says that any branded company can launch one product at a time. In case an owner has another product, then an approval from the government has to be taken for launching it separately.

The cost of setting up of stores, shopping mall, or others in India is quite less when compared to other countries. Cost on labor, comfortable facilities, marketing, licensing, and others are very low and services are effective. These investors could choose to have their stores in metropolitan cities for better results.

Foreign direct investment in various retail industries of many states and cities belong to India strengthens political, social, and economical bonding between different countries. It also creates an opportunity for the country to export many of their products to other businesses, especially in order to increase global economy.  

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Sowmya Somaiah has 57 articles online

Ms. Sowmya Somaiah is a Company Secretary and Founder of “Sunshine Corporate Solutions Pvt Ltd” at Bangalore, India. For more information visit http://www.sunshinecorp.biz

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Significance of FDI in Single Brand Retail Industry

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This article was published on 2012/04/24