CHENNAI: The uncertainty over the extent of opening up of the retailing sector in the country has cleared somewhat, with the Union Government on Monday issuing guidelines on the concept of "single brand.''

According to an announcement by the Department of Industrial Policy and Promotion (DIPP) on Monday, foreign direct investment (FDI) up to 51 per cent in retail trade of `single brand' products would be subject to the following conditions: "products to be sold should be of a `single brand' only, products should be sold under the same brand internationally; and `single brand' product retailing would cover only products which are branded during manufacturing.''

The announcement says FDI would be allowed only with prior approval of the Government. Applications seeking permission for FDI in retail of `single brand' products should be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy and Promotion. The application should specifically indicate the product/product categories, which are proposed to be sold under a `single brand'. Any addition to the product/product categories which are proposed to be sold under `single brand' would require a fresh approval of the government.

Applications would be processed in the DIPP before being considered by the Foreign Investment Promotion Board (FIPB) for government approval. These guidelines come into force with immediate effect.

It may be recalled that though the earlier official announcement of the Cabinet's decision on January 24 to allow single brand products mentioned examples like Sony and Nokia, speculation on the extent of opening up of the sector had persisted. It is perhaps even now not absolutely clear whether "store brands" or "private labels'' branded during the manufacturing process could be sold in retail under the FDI policy.

Meanwhile, the CEO of the Retailers' Association of India, Gibson Vedamani, has welcomed the government's guidelines. Talking to The Hindu over telephone from Mumbai, Mr. Vedamani said the guidelines would ensure that the food and grocery segment of Indian retailing would not face competition from foreign capital because this sector in India tended to be multi stock keeper units (SKU) and multi brands.

Partial opening up of the retail sector would at the same time benefit the Indian consumer by making available at his or her doorsteps quality goods, which he or she had all along been trying to obtain while on visits abroad. It would also encourage joint ventures in retailing in place of franchising. The Indian partners with their familiarity with the national market would be valuable to their international partners in operating the ventures, he added.

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