Goverment looking to push forward single-brand retail proposals

NEW DELHI: The government has got a mixed response to the liberalisation of overseas investment rules in the retail sector. There’s been just one multi-brand retail proposal since the relaxation – the Tesco-Tata deal announced on Tuesday. But it’s a different story in single-brand retail – there have been more than a dozen investment proposals submitted, with the government keen on pushing them through quickly as a way of signalling how investor friendly it has become.

Tommy Hilfiger, Furla, Bulgari, Officina Farma Italiana and Damro Exports are among the retail brands that have submitted applications to the Department of Industrial Policy & Promotion (DIPP) for permission to open stores.

DIPP, which aims to pass on the Tesco proposal to the Foreign Investment Promotion Board (FIPB) at the latter’s next meeting, will also submit the single-brand applications for a quick decision. Tesco plans to invest $110 million in partnership with the Tatas, the first such proposal since the sector was opened to foreign investment in September last year. “We have received 17 singe-brand retail proposals, but two-three of them do not comply with the conditionality; the rest we will try sending to the FIPB soon,” said a senior DIPP official.


The government last year raised the foreign direct investment (FDI) limit in single-brand retail to 100 per cent from 51 per cent, gaining the attention of investors that want to retain close control of the way their operations are run in the country, besides freeing them up to determine investment levels.

Still, not every company is looking to go solo. For instance, Italian brand Furla, known for its handbags and shoes, has sought approval for a 51:49 joint venture with Genesis Luxury, which currently runs two Furla stores as a franchisee. A spokesperson for Genesis said the company would comment only after FIPB approved the proposal, which has been pending for more than six months. “We are yet to get a go ahead from the Foreign Investment Promotion Board of India to have a joint venture here. The moment it happens, our investments will be made at a super-fast speed,” said CEO Eraldo Poletto told ET in an earlier interview. Tommy Hilfiger Arvind Fashion is bullish on India as the brand has shown “robust financial performance” over years & clocked sales of .`80 crore for the fiscal year ended March 2011, it said in a DIPP application.

Revenue is expected to have swelled four times to Rs320 crore for the fiscal year ended March 2012, according to investment documents filed by Tommy Hilfiger with DIPP last year. Shailesh Chaturvedi, chief executive for Tommy Hilfiger in India, declined to comment on its application.

Italian luxury label Bulgari plans to re-enter the Indian market after a two-year absence, with single-brand stores selling jewellery, watches and accessories.

“The rush of single-brand proposals is a very positive signal in terms of investment climate in the country. The initial apprehensions about the policy seem to be waning,” said Akash Gupt, executive director, PwC.

Last month, Swedish clothing giant Hennes & Mauritz received approval to open 50 stores across the country with a planned investment of Rs700 crore. Before that, Swedish furniture maker Ikea received approval for its plan to set up stores in the country with an investment of Rs10,500 crore, the largest single-brand retail proposal by value thus far.