Expect riders for FDI in single-brand retail
While French designer brand Louis Vuitton may have got an approval to invest Rs 1.5 crore with a paid up share capital of 51%, it has also been asked by the government to meet 50% of the export obligation.
NEW DELHI: Foreign direct investment (FDI) in single-branded retail isn’t coming in without riders. While French designer brand Louis Vuitton may have got an approval to invest Rs 1.5 crore with a paid up share capital of 51%, it has also been asked by the government to meet 50% of the export obligation, in case it decides to manufacture items reserved for the small scale sector. Moreover, even if the company wants to add one more item for trading in India, it needs to seek fresh approval from the Foreign Investment Promotion Board (FIPB).
The ministry of small scale industries had given its comments to the FIPB stating that items like ballpoint pen, umbrella, cufflinks, which had been proposed for trading, fall within the domain of the small scale industry. While these items are currently reserved for manufacturing only by small companies, there exists no restriction to protect the interest of the small industries as far as trading of these items is concerned. The FIPB gave its go-ahead to Louis Vuitton on this ground.
Louis Vuitton has stated that it intends to invest an additional Rs 26.5 crore over the next five years depending on its Indian experience. The company will assess the growth potential in this niche segment of luxury branded products as well as the regulatory scenario in the country while investing in the future. Louis Vuitton (LV) will invest in India by subscribing to 51% of the paid up share capital of LV Trading resulting in an inflow of Rs 1.5 crore in a year’s time. It will also invest another Rs 4.2 crore by subscribing to redeemable non-convertible preference shares of LVT India.
Louis Vuitton has plans to sell writing instruments, shoes, trunks, travel bags, sunglasses, imitation jewellery, watches etc. manufactured under its own brand abroad.
The ministry of small scale industries had given its comments to the FIPB stating that items like ballpoint pen, umbrella, cufflinks, which had been proposed for trading, fall within the domain of the small scale industry. While these items are currently reserved for manufacturing only by small companies, there exists no restriction to protect the interest of the small industries as far as trading of these items is concerned. The FIPB gave its go-ahead to Louis Vuitton on this ground.
Louis Vuitton has stated that it intends to invest an additional Rs 26.5 crore over the next five years depending on its Indian experience. The company will assess the growth potential in this niche segment of luxury branded products as well as the regulatory scenario in the country while investing in the future. Louis Vuitton (LV) will invest in India by subscribing to 51% of the paid up share capital of LV Trading resulting in an inflow of Rs 1.5 crore in a year’s time. It will also invest another Rs 4.2 crore by subscribing to redeemable non-convertible preference shares of LVT India.
Louis Vuitton has plans to sell writing instruments, shoes, trunks, travel bags, sunglasses, imitation jewellery, watches etc. manufactured under its own brand abroad.
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