FDI in single-brand retail fails to gain momentum: Report,

Despite opposition from various quarters, on Tuesday, January 10, 2012, the

Government of India notified 100 percent foreign direct
investment (FDI) in single brand retail allowing the setting up of wholly owned
shops by global retail chains like IKEA, Adidas, Louis Vuitton, Armani,
Vuitton, LLadro, Nike, Fendi and Toyota, GAP, Prada, Abercrombie, Hennes &
Mauritz and Arcadia. Though 51 percent FDI in single brand products
was allowed in February 2006, not much investment has come in this sector
during the last four years, FDI worth only about Rs. 200 crore was received. The
government believes that apart from the entry of new players into the market,
the decision to allow 100 percent FDI in single-brand retail is also expected
to result in several present players, who are operating via tie-ups with Indian
companies, to convert their existing ventures into wholly-owned subsidiaries.
The news that foreign investment in single-brand retail has failed to gain momentum

despite hike in FDI limit to 100per cent from 51 per cent earlier is not surprising. 

According to the Union Commerce and Industry Minister, Mr. Anand
Sharma, the stipulation that at least 30 per cent of the total value of
the products sold would have to be done from Indian ‘small industries, village
and cottage industries, and artisans “will provide stimulus to domestic
manufacturing value addition and help in technical upgradation of our local
small industry." But experts believe that it will be impossible to ensure
the compliance of these conditions by the multinational retail chains,
especially in the absence of strict guidelines and due to lack of effective
implementing machinery. Therefore, they say that there is no justification for

allowing100 percent FDI in single brand retail. It will certainly kill local

 entrepreneurship.  Actually, recently, all over the country many new generation
entrepreneurs and existing players in India have established single brand large
retail shops all over the country, whose fate is in danger due to allowing
foreigners to have 100 percent investment (FDI) in single-brand retail trade in
the country .The share of foreign investment in single-brand retail out
of the total FDI inflow into the country has declined from 0.03 per cent in

 December 2011 to 0.02 per cent in June 2012. The primary reason which put

down the interest of foreign players is the conditions on sourcing from small scale

 industry. It means that the foreign retail giants are not interested to procure from

MSMEs in India. They want to dump the cheap throw away Chinese products

 into India.Dr.C.Murukadas, Hindustan Times, October 03, 2012