By Akshina Bhatnagar- MBA(FM)

GROWTH OF INDIAN RETAIL WITH THE PRESENCE OF FDI NORMS Upto now, the global retailers owning a single brand had to look for an Indian partner. This was due to the fact that the FDI in single retail was only 51%. Currently, India allows 100% FDI in cash-and-carry. The ministry had earlier allowed the relaxation in multi-brand retail investment norms up to 51 percent which led to the development of the merger between bharti and walmart. Today , the removal of this investment issue will help global fashion brands especially from France and Italy to strengthen their interest in the Indian market. Many big names have already set up their operations in the country by making Indian partners. The new policy would allow them to buy out the domestic partners. With this initiative, government expects the enhancement of competitiveness of Indian enterprises through access to global design, technologies and management practices. Apart from this, it gives the wide array of options to the consumers. Moreover, this move will make India a hot retail destination and bring in large number of foreign investors. However, wrt the proposals involving FDI beyond 51 per cent, the mandatory sourcing of at least 30 per cent would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of USD 1 million (about Rs 5 crore). This clause leads to the direct benefit for the SME (small and medium-sized enterprises) sector Furthermore, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through selfcertification by the company, to be subsequently checked, by statutory auditors. As told by the techno park, FDI in single retail of 51% was executed from 2006, not much of investment has happened so far. During the last three and a half years- business of 196 crores have happened in this sector. According to the US India Business Councils, with India's decision to allow 100 per cent FDI in single-brand retail which has been opened fully for foreign companies, is expected to grow about three-folds to USD 20-25 billion in the next five years. Prominent American brands, including Nike, Reebok, Calvin Klein, Estee Lauder and others have already established a presence in India under various operating models. The lifting of FDI restrictions in single-brand retail now presents an attractive option that will broaden brand awareness, and incentivize many other companies to enter the Indian market, USIBC said. With the clause of 30% local sourcing, it will be a deterrent for the luxury market to keep up their brand standards and quality of products in India. Hence, luxury brands like Louis Vuitton or Gucci, which are already in India, might look to expand their presence while others would be unlikely to jump in with a 100-percent owned store.