US-based accessories manufacturer Fossil Inc has proposed to invest Rs 20 crore (about $4.5 million) in India in a fully owned single brand retail venture. The proposal, made by Fossil India Private Ltd, a 100% subsidiary of Fossil, is being examined by the Department of Industrial Policy and Promotion (DIPP). “FIPL has proposed to invest Rs 20 crore in a 100% single brand retail venture. The proposal is with the DIPP,” a senior DIPP official told ET. This is the third single brand retail proposal that has been cleared by the department, marking a significant progress in the government’s attempts to attract foreign direct investment (FDI). The UK-based footwear company Pavers England and Swedish furniture retailer Ikea have put in a formal proposal after the government raised the FDI limit for single brand retail to 100% from 51% subject to conditions. Fossil, which sells high-end watches and other accessories.
The official said that the department will examine the proposal to ensure that it adheres to all the criteria spelled out in the FDI policy for single brand retail before forwarding it to the Foreign Investment Promotion Board, or FIPB, that takes a final call on the matter. “Once we are satisfied that all the terms and conditions for 100% FDI in single brand retail are met, we will give it to the FIPB for clearance,” the official said. DIPP has given the green signal to Pavers England proposal to invest $ 20 million in its Indian single brand retail which is expected to be vetted by the FIPB in its meeting later this month.
Early this year when the government decided to allow 100% FDI in single brand retail, but foreign investors were compulsorily required to source 30% of their goods from small and medium enterprises. The government has now said that the domestic sourcing no longer needs to be done from the SME sector. “There are several more proposals for 100% single-brand investment that are in the pipeline and would be formalised soon,” the official said. In multi-brand retail though, there has been no formal proposals yet as prospective investors are still looking at the fine print of the conditionalities under which the government has agreed to allow 51% FDI.
“We know that several foreign retailers including Walmart, Carrefour and Tesco are interested in entering the Indian market in front-end operations. It is only a matter of time before they come with formal investment proposals,” the official added.
News source: Economic Times