Just a day before French President Francois Hollande’s visit to India, the Foreign Investment Promotion Board (FIPB) has cleared three single-brand retail proposals from France, sending out a positive message to the international community.
Apart from the three French proposals — sports retail giant Decathlon, women’s fashion brand Promod and cookware manufacturer Le Creuset — US accessory company Fossil’s proposal was also cleared.
In all, four foreign single-brand applications worth over Rs 752-crore investments were cleared today.
The biggest to be cleared was of Decathlon, at around Rs 700 crore. Decathlon, already present in the country in the business-to-business or wholesale space, is now going retail.
French women’s fashion major Promod is in a 51:49 joint venture with a local partner, Major Brands. While Promod is set to invest around Rs 30 crore to begin with, Le Creuset has not laid down any fresh investment plan, as it probably wants to rejig its wholesale business in the country.
American accessory company Fossil, with a proposed investment of Rs 22 crore, was the fourth such proposal to be cleared.
Arvind Singhal, founder and chairman of Technopak Advisor, a retail consultancy, told Business Standard: “Decathlon’s proposal is very impressive, with its plan for substantial investment.” Although IKEA remains the biggest in single-brand retail, the ones cleared today would add up to give a vote of confidence to the Indian market, Singhal said.
Pinaki Ranjan Mishra, partner (retail and consumer products), Ernst & Young, said: “It is a directionally positive step for the retail industry.” Even as multi-brand and single brand are technically very different and they have varying sets of challenges, this development will be seen as a positive movement by the entire industry, Mishra said.
Single-brand is just a fraction of the largely unorganised Indian retail market, pegged at $500 billion (Rs 25 lakh crore).
FIPB had last month approved the big-ticket proposal of Swedish furniture major IKEA, ahead of the World Economic Forum in Davos. So far, IKEA’s proposal for the Rs 10,500-crore investment is the largest in single-brand retail.
French multi-brand chain Carrefour, which operates four cash-and-carry stores in India, is waiting to get into front-end retail and is yet to firm up a local partner. The nod to so many single-brand French retailers may enthuse players such as Carrefour to speed up their India plans, sources said.
H&M, Tops, GAP are among those expected to enter soon. The single brand market, estimated roughly at $7 billion (Rs 35,000 crore), could grow to touch $25 billion (Rs 1.25 lakh crore) in the next five years, a recent study said.
The government raised the foreign direct investment limit to 100 per cent from 51 per cent earlier in January 2012. Besides IKEA, other single-brand chains that got approval to operate in the country after the policy change include UK-based footwear company Pavers England, American clothing group Brooks Brothers and Italian jewellery maker Damiani.
However, more than five months after the opening of the multi-brand retail sector, not a single application has come from that category yet.
