DIPP working out detail definition of 'single brand retail'
New Delhi: Government is in the process of coming out with a definition of 'single brand retail' to remove ambiguities, in the wake of issues arising out of retailing of sub-brands by global retailers like M&S and Zara.
"There is no definition of single-brand retail in the FDI policy. The Department of Industrial Policy & Promotion (DIPP) is working on clearly defining the term. Through this, the department will be able to eliminate the dilemma over selling of sub-brands or labels under the ambit of FDI policy in the single brand retailing," sources said.
The move follows the issues raised by the Finance Ministry over the sale of sub-brands by the UK-based retailer Marks & Spencer (M&S).
The retailer was under the scanner for a possible violation of FDI policy in single-brand retail that restricts such players from retailing multiple brands in the single brand retail store.
The finance ministry had raised the matter with the DIPP seeking if M&S practice of selling sub-brands was in conformity with the foreign direct investment (FDI) policy.
"By defining the term, the DIPP can resolve issues pertaining to global retailers like M&S and Zara," the source said.
As per the current policy, products to be sold should be of a 'single brand' only.
According to industry experts, this policy means multiple brands or sub-brands owned by the same company can neither be sold under one roof nor sold by the same firm.
"There is no mention of sub-brands and labels in the Indian FDI policy. Globally also, there is no such concept of single-brand retailing," they added.
The M&S sells sub-brands like Limited Collection, Autograph, Collezione and Blue Harbour apart from its flagship M&S brand, in its stores across the country.
Similarly, Spanish clothing company Inditex sells the Zara brand in partnership with Tata Group's Trent in India. However, Zara's products are branded as Zara Man and Zara Woman.
Inditex-owned Massimo Dutti also has different brands of products for men and women, although both brands include the mother-brand's name in the prefix.
So far, the government has approved 63 proposals of foreign companies, including Louis Vuitton for retailing in single brand in the country.
In January last year, India hiked the foreign direct investment (FDI) cap in single-brand retail to 100 percent from 51 percent.
Till May 2012, the total FDI equity inflows in the single brand retail trade were meager Rs 204.07 crore. The government has recently cleared Swedish furniture major IKEA's Rs 10,500 crore proposal, which is one of the biggest FDI proposal in the sector.