Government Relaxes FDI Norms for the Indian Retail Sector

The government is on a roll and is making concerted efforts to bring
India’s economic growth back on track. In line with the overall demand, the government today relaxed the FDI norms in single-brand retail and expanded the definition of mandatory 30% domestic sourcing norms.

This is excellent news for foreign retailers giants like IKEA and Apple who will now find Indian market more lucrative to invest and conduct business in. Many foreign brands have been in a wait-and-watch mode on account of the difficulties so far perceived in meeting the mandated sourcing norms. With more clarity, many of such players can now make their foray into India to tap into India’s consumption story – and to boost investments here.

Also, the announcement to allow single-brand retailers to start online sales, effectively doing away with the previous condition of first setting up a mandatory brick-and-mortar store, is also commendable. Massive capital is required for setting up a physical store vis-à-vis online platforms. Now retailers can start online sales without having to open physical stores. This will significantly ease capital pressure on small retailers who are looking to start afresh.

Shobhit Agarwal, MD & CEO – ANAROCK Capital