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Reviewed FDI regulations allow single-brand retail companies to go Ecommerce

Single-brand retail companies wanting to sell on Ecommerce platforms will be able to do so only if they have a licence for setting up physical outlets, according to revised foreign direct investment regulations.

Any brand entering India will have to apply for a licence to set up stores and once it secures the licence, it can sell products online through the automatic route.

The Department of Industrial Policy and Promotion (DIPP) announced a slew of FDI reforms across 15 sectors. A press note notifying these changes in legal parlance is being finalised and will be released soon by the DIPP.

There was no reason why brands, which are selling through their stores, be restricted from Ecommerce Platform. Government’s intention was to make these norms easier for such companies not to let them apply for Ecommerce directly.

At present, single-brand retail allows 49% FDI under the automatic route, which can go up to 100% with government approval.

Besides, the ecommerce platform has been thrown open to all the companies that undertake manufacturing in India apart from selling through wholesale or retail without the government approval.

To give high-end single-brand entities easier access to India, the government has also said that “in case of state of the art and cuttingedge technology, sourcing norms can be relaxed subject to government approval”.

The revised FDI guidelines say that sourcing of 30% of the value of goods purchased would be “reckoned from the opening of the first store”.

 

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eMinds Legal

eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

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