100% FDI in Single Brand Retail

Department of Industrial Policy & Promotion (DIPP) has issued Press Note No.1 (2012 Series) dated 10.1.2012 through which it allows 100% FDI to be invested in Single Brand Retail.  International companies are now free to invest upto 100% in Single Brand Retail.  The following are the main conditions laid down for this 100% FDI investment

1. Products sold should be of Single Brand only
2. Products should be sold under the same brand internationally
3. The products should be branded during manufacture
4. The foreign investor should be the owner of the brand (not a person paying Royalty for the same)
5. If investment is more than 51% then 30% of the product sourcing should be done only through Indian Small / Cottage industries whose investment does not exceed USD 1 million in Plant & Machinery

Though the conditions stipulated above are quite stringent, there is always scope once the scheme is kicked in there will be further relaxation. 

Currently in Single Brand Retail sector there is not much investment due to the 51% cap, in fact as per statistics provided by Economic Times in its 11 Jan edition in the last three and half years only Rs.196 crores were brought in as FDI in Single Brand Retail, which surely does not talk about success of this scheme.  I also doubt by bringing in the above 5 conditions to run along with 100% FDI in Single Brand Retail there will be substantial flow of FDI.  It will be sometime before both the Government and FDI's get their act together and give this sector a much needed boost