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INDIA: Government Eases Restrictions To Lure Foreign Retailers

Global retail giants are facing a considerably easier path into the Indian market, after the country’s central government discarded several restrictions for allowing foreign investment into the sector. The restrictions had been criticised by the industry and had resulted in the lack of applications by foreign players to set up shop in the country, despite being allowed to do so since late 2012.

The biggest change is the decision to scrap restrictions on allowing international multi-brand retailers from opening only in cities with a population of more than 1 million. This would have restricted chains such as Walmart and Carrefour to just 53 cities across the country.

The new ruling has also altered the definition of micro medium small enterprises (MSMEs) to those that have invested $2m on equipment, from a previous cap of $1m. Any foreign retailers will have to source 30% of their local offer from such companies in India. A request to lower this cap to 20% was not accepted.

And finally, the government has clarified that foreign retailers will only need to invest 50% on back-end infrastructure through the first tranche of $100m. Any further investments will not be applicable for that ceiling.

The news has been welcomed by local players, while global chains said they will study the ramifications of the new clarifications before announcing their plans for the country.

NamNews - Friday 2nd August 2013

INDIA: Government Eases Restrictions To Lure Foreign Retailers


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