Foreign retailers entering India’s multi-brand segment will not be allowed to franchise their stores, and will have to put 50 per cent of their investments in back-end infrastructure specifically for the chain they are setting up.
In a clarification issued on queries from global retailers, including Wal-mart, Tesco and Carrefour, on FDI policy for multi-brand retail trading (MBRT), the Department of Industrial Policy and Promotion (DIPP) said the “front-end stores set up by MBRT entity will have to be company-owned and company operated only.’’
The DIPP also said the mandatory 30 per cent sourcing from small industries will be counted only for sales through the front-end stores.
It clarified that as per the conditions for wholesale cash & carry trading, such an entity is not permitted to undertake retailing of any form.
As regards supplies by MBRT company to franchisees run by its partners, it is clarified that the policy envisages multi-brand trading in retail and the MBRT entity is not envisaged to undertake wholesale activity, that is, B2B. It said the cash & carry trading cannot be considered to be providing back-end infrastructure to the multi-brand retail store. — PTI