FDI in Multiple Brand Retail Trading in India
FDI up to 51 percent in entities undertaking Multiple Brand Retail Trading (MBRT) is allowed with the prior approval of the government subject to compliance of certain conditions. The FDI Policy does not define the term ‘multi brand’. However, MBRT generally implies the sale of multiple brands to end customers for personal consumption. Some of the important conditions, per the FDI Policy, requiring compliance are (a) MBRT can be undertaken only in states in India that have agreed to allow the same subject to certain conditions relating to population size etc.; (b) minimum amount to be brought in, as FDI, by the foreign investor, needs to be USD 100 million; (c) 50 percent of total FDI brought in to be invested in backend infrastructure (defined in the FDI Policy); (d) Similar requirement of mandatory local sourcing as applicable in SBRT is applicable to MBRT however, certain relaxation with respect to local sourcing, as provided to SBRT entities having FDI, are not applicable for MBRT. Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of MBRT.