Brands from Apple to IKEA seen gaining on retail fillip
11 January 2018
Marketplace to see stiffer fight among foreign, local brands.
International single brand retailers from Apple Inc. to furniture giant IKEA, Nike and Dell would find it attractive to set up shop or expand existing operations in India in the wake of the government’s move to allow 100% foreign direct investment (FDI) in single brand retail via the automatic route and ease sourcing norms, according to analysts.
Tax & Regulatory Partner, BDO India said "The Indian marketplace was likely to witness a stiffer fight between Indian and global brands. FDI in retail trading in India shifts the pace to the next level. With 100% FDI permitted under automatic route and relaxed sourcing requirements, the market has now opened up to a tug of war between Indian and global brands. Consumers would have access to international products while the Indian sourcing requirements for single brand retailers have been pegged to cover global procurement models."
Kumar Rajagopalan, CEO of Retail Association of India (RAI) opined that the decision would ease the process for foreign as well Indian brands interested in being part of the ‘Great Indian Retail Story’. “It is known that global companies take time to develop good suppliers as partners and hence the relaxed time frame for sourcing is conducive without compromising India’s need to be a good sourcing hub for global brands,” said Mr. Rajagopalan.
“This should also generate employment and give Indian consumers access to several international brands,” said Aashish Kasad, India region tax leader, consumer products and retail, EY India.
However, there was also an expectation that FDI norms for multi-brand retail would be eased, he added.