RSS FeedThe Legal Column: Foreign Investment In Retail May Need Creative Structuring
Wed, 09/13/2006 - 08:13 — Sahad P V[Editor's note: The issue of foreign direct investment in retail has puzzled many readers. Especially, when private equity funds are queuing up to pick up stake in retail chains. Most of the private equity money is of foreign origin. For instance, there is talk of UK private equity fund Actis buying a majority stake in The Nilgiri Dairy Farm, a Bangalore-based retail chain. VC Circle asked Shantanu Surpure, a partner with Economic Laws Practice, a Mumbai-based law firm, to write on the issue of FDI in retail. Here is his guest column on the topic. By the way, Shantanu would be writing a regular fortnightly column for VC Circle.]
[By Shantanu Surpure]
Retail presents the next big opportunity (worth $250 billion) for the foreign investor. However, foreign direct investment in the India retail sector is currently restricted.
There are several methods pursuant to which a foreign investor may gain exposure to the Indian retail sector:
(i) Pursuant to Press Note No. 3 (2006 series), foreign direct investment up to 51% is now permitted in single brand retail trade with the prior approval of the government;
(ii) Pursuant to Press Note No. 4 (2006 series), foreign direct investment up to 100% is now permitted under automatic route for cash and carry wholesale trade; or
(iii) The foreign investor could enter into franchise arrangements.
LVMH is among the international brands that have indicated interest in a 51% stake. However, multi-brand retail stores such as Wal Mart are not yet permitted.
Although
Comments
How have Bharti Walmart and
erastus, August 11, 2008How have Bharti Walmart and Tata Tesco been able to achieve there Joint Ventures for retailing if FDI investment in retailing is banned.
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erastus
How have Bharti Walmart and
mercy.mercy08, August 08, 2008How have Bharti Walmart and Tata Tesco been able to achieve there Joint Ventures for retailing if FDI investment in retailing is banned.
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mercy
asciisol
Thanks for the informative
john, August 06, 2008Thanks for the informative post.Can you also kindly clarify if FDI in retail applies to companies that manufacture, distribute and retail their own brands or licensed brands and dont retail other traded products?
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john
google
How have Bharti Walmart and
williams, August 06, 2008How have Bharti Walmart and Tata Tesco been able to achieve there Joint Ventures for retailing if FDI investment in retailing is banned?
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williams
google
From these discussions i got
aylen, August 05, 2008From these discussions i got an idea about share markets.Thank you for giving me valuable information.
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aylen
nokia
Does the government treat
padma233, August 02, 2008Does the government treat FDI and FII seperately in retail? Pantaloon has a lot of FIIs as part of its shareholders.
Regards
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padma233
How have Bharti Walmart and
jack1100, August 01, 2008How have Bharti Walmart and Tata Tesco been able to achieve there Joint Ventures for retailing if FDI investment in retailing is banned.
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jack1100
Thanks for the informative
jack1100, August 01, 2008Thanks for the informative post. Can you also kindly clarify if FDI in retail applies to companies that manufacture, distribute and retail their own brands or licensed brands and dont retail other traded products?
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JACK1100
GAME ALL
How have Bharti Walmart and
johnson789, July 22, 2008How have Bharti Walmart and Tata Tesco been able to achieve there Joint Ventures for retailing if FDI investment in retailing is banned.
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johnson789
Wide Circles
Wide Circles
hi, thank you informative
sandy, August 13, 2008hi,
thank you informative post. you can kindly clarify if FDI in retail applies to companies.it can be the permitted in realty side of the Retail business.cannot own more than the 35%of the company