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2/29/12

Foreign Direct Investment in Indian Retail Sector – An Analysis : Pulkit Agarwal :: Legal India : Law Info…

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Foreign Direct Investment in Indian Retail Sector – An Analysis

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BY:-Pulkit Agarwal Esha Tyagi

Introduction Just back from first frenzied shopping experience in the UK, a four year old ever-inquisitive daughter asked to her father, “Why do we not have a Harrods in Delhi? Shopping there is so much fun!” Simple question for a four-year-old, but not so simple for her father to explain. As per the current regulatory regime, retail trading (except under single-brand product retailing — FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a company to be able to get foreign funding, products sold by it to the general public should only be of a ‘single-brand’; this condition being in addition to a few other conditions to be adhered to. That explains why

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2/29/12

Foreign Direct Investment in Indian Retail Sector – An Analysis : Pulkit Agarwal :: Legal India : Law Info…

we do not have a Harrods in Delhi. India being a signatory to World Trade Organisation’s General Agreement on Trade in Services, which include wholesale and retailing services, had to open up the retail trade sector to foreign investment. There were initial reservations towards opening up of retail sector arising from fear of job losses, procurement from international market, competition and loss of entrepreneurial opportunities. However, the government in a series of moves has opened up the retail sector slowly to Foreign Direct Investment (“FDI”). In 1997, FDI in cash and carry (wholesale) with 100...