The proposal of Zara to set up a joint venture with 51 per cent foreign equity participation for single-brand retail trading has been rejected, said a Finance Ministry statement.
Zara Holding, as per the reports, had proposed to set up a joint venture company with foreign equity participation for single-brand retail trading of Massimo Dutti brand.
The FIPB, according to sources, rejected the proposal citing violation of a rule framed by the Department of Industrial Policy and Promotion (DIPP) under which an investor must own the brand it proposes to bring to India.
Zara could not be contacted for comments.
In the case of Massimo Dutti, the application was made by Zara Holdings Netherlands, but the brand is owned by Spanish retail chain, Inditex.
The FIPB, under the Finance Ministry, clears FDI related proposals of companies.
Zara, which is present in India, is one of the largest international fashion companies. It belongs to Inditex, one of the world