Thursday, April 18, 2024
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Government Relaxes FDI Norms for Indian Retail Sector

Shobhit Agarwal

The government is on a roll and is making concerted efforts to bring India’s economic growth back on track. In line with overall demand, the government yesterday relaxed 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 the Indian market more lucrative to invest and conduct business in. Many international 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 such players can now make their foray into India to tap into the 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 mandatory condition of first setting up a brick-and-mortar store, is 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 anew.


The author of this article is managing director and CEO at ANAROCK Capital. Views are personal.

 

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