India gazing more on Foreign Investment

Foreign Investment India

The Indian government is taking more steps to boost FDI in the country. Foreign investments provide a great stimulus for growth to the Indian economy. The continuous inflow of foreign direct investments (FDI), which is now allowed across several industries, manifests the faith that foreign investors have in the country’s economy.FDI inflows to India increased 17 per cent in 2013 to reach US$ 28 billion, as per a United Nations report. Foreign investment inflows are anticipated to more than double and breach the US$ 60 billion mark in FY 15 as foreign investors show more confidence in India’s new government, as per an industry study.


FIPB clears five retail proposals worth Rs420 crore. Three proposals in single-brand retail, two in multi-brand retail trading in duty free goods get go-ahead


The Foreign Investment Promotion Board (FIPB) on Tuesday cleared five retail proposals worth Rs.420 crore from companies such as Puma SA, Bestseller and Flemingo, lifting investor sentiment in retail trading in Asia’s third largest economy. The proposals given the go ahead included two for multi-brand retail trading in duty free goods. Dubai-based Flemingo International’s Rs.190 crore proposal to set up a fully owned subsidiary as well as a 49% investment in an Indian duty free company was approved by FIPB. The company is a global duty free and travel retail operator that first opened shop in the country in 2003. Also cleared was US-based Miami Perfume Junction’s Rs.10 crore proposal for incorporation of a wholly owned subsidiary in India to sell duty free goods in airlines and run duty free shops at airports. To be sure, most of these brands have been present in India either through franchises or through local joint ventures. The current proposals are designed to give the firms further control of their India operations. Additionally, the board cleared three 100% single-brand retail proposals worth Rs.222.5 crore, suggesting renewed interest in India’s growing retail market. German sportswear retailer Puma; Danish fashion wear company Bestseller and American soap retailer Lush received clearances to operate 100% company-owned retail operations in the country. Bestseller Retail, which operates 3,000 stores in Europe, West Asia and India across various fashion brands, said it will invest Rs.210 crore into its three brands in the country. Bestseller has sought approval for establishing a wholly-owned subsidiary for each of its three brands’ Jack and Jones, Vero Moda and Only. Part of the application has also sought approval to acquire 100% equity in Best United India Comforts Pvt. Ltd, one of the company’s franchise partners. The applicant currently proposes to make an investment of $5 million for acquisition of equity shares from existing shareholders as well as for setting up single-brand retail stores in the initial stages. It operates a total of 500 points of sales in India through a franchise model with the Mumbai-based Aggarwal family, promoters of textile company Bombay Rayon Fashion Ltd. The firm will use the capital to add more retail stores in the country, where large foreign fashion brands such as Hennes and Mauritz (H&M) and GAP Inc are in the running to open stores by 2015. The apparel market accounts for 6% of India’s consumption expenditure and is expected to touch $225 billion (around Rs.14 trillion today) by 2020, according to a 2012 report by consultancy Boston Consulting Group. Bestseller’s India head declined to comment on the firm’s future retail plans for the market. Additionally, sportswear brand Puma India, that has been operating in the country since 2005, received approval to convert its 51% stake in Puma India Retail, a JV it formed in 2006,to a 100% fully-owned venture through an equity infusion of Rs.10 crore. The firm has sought approval for trading of additional products under the Puma brand. In September, Puma’s close competitor Nike, too, sought the government’s approval to open company-owned stores in India. Puma’s India head declined to comment on the firm’s plans. These investments come nearly two years after the government eased norms for retailers to open stores. In September 2012, India allowed 100% entry in single-brand retail trading, with some conditions. Following this, top retailers such as IKEA and H&M announced sizeable investments to tap into India’s growing consumerism. Industry experts suggest there has been a revival in retailers’ long- term plans. American soap maker Lush has received approval to convert its existing business to a wholly owned unit in India to undertake single brand retail trading of Lush products, worth Rs.2.5 crore. The company has been selling soaps in the country since 2004.

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South Korean beauty brand Innisfree gets nod to start single brand retail ops in India; to invest $12 mn


The spate of new entrants in country’s liberalised single brand retail format continues with the latest entrant being South Korea’s biggest natural beauty brand Innisfree. The entity has been given permission by the government to engage in the business of single brand retail trading in the country allowing it to expand the network of exclusive stores that command high levels of popularity in the markets of Japan, China and Singapore. In 2012, the government relaxed the threshold of foreign direct investment (FDI) in single-brand retail trading from 51% to 100%. This resulted in a spate of proposals coming for approval including that of Swedish furniture maker IKEA, Pavers, Celio, Gruppo Coin, Italian health and wellness entity Artsana, European apparel maker Hennes&Mauritz (H&M), Mango, Tommy Hilfiger. With regard to Innisfree, the Department of Industrial Policy and Promotion (DIPP) has given its nod to the proposal of Innisfree India Pvt Ltd for single brand retailing of its natural cosmetic and beauty products. Under the proposal, Hong Kong-based Amorepacific Global Operations, the parent entity, would pick up 100% stake in the Indian unit by pumping in initial capital of $ 11.8 million. The Korean entity would also be subjected to the 30% local sourcing condition, preferably from MSME, village and cottage industries, and would be barred from retail trading in any other form including through the e-commerce platform. Under the policy, it would also have to operate through excluve stand alone stores set up to retail Innisfree products. For Innisfree entry into the Indian market is aimed at capturing a substantial share of the growing beauty product market. According to consultancy firm Technopak, working women tend to spend 35% or more of their income on themselves, splurging on everything from cosmetics to cars. It estimates that about 10 million urban women in the age group of 20-40 years are employed in corporate managerial jobs and this number is expected to increase five fold to 50 million by 2020 presenting huge market for companies like Innisfree. Innisfree offers a range of 100% natural product lines made of Green Tea, Olive, Wine, White C, Jeju Volcanic and other natural ingredients. It has a a celebrated Green Tea product line made from organic green tea leaves raised at the beauty giant’s tea garden, Seokwang Green Tea Garden in Jeju. The range comprises of a unique products like Green Tea Sleeping Mask,Green Tea Seed Serum, Green Tea Mist and Green Tea Recipe Capsule Pack to name a few. It also has a range of products Skin Care and Beauty to natural looking lip tints, CC and BB Creams along with green and eco-friendly nail paints. Innisfree currently operates 800 stores including South Korea, China, Japan, Hong Kong and Singapore. It also has a store in Khan Market, Delhi. (Source:


Chinese lighting company Opple enters Indian market, sets up first retail store in Chennai by investing about INR 60 CR


Chinese lighting solutions company Opple Lighting has entered the Indian LED lighting market with the launch of its first retail store in Chennai. The Rs 3,000-crore company has a presence in over 50 countries and provides lighting solutions for both retail and commercial users. Opple plans to invest about Rs 60 crore for its India operations, primarily for brand building and marketing. The company plans to set up 50 exclusive brand outlets and about 400 shop-in-shop stores over the next three years, according to Opple Lighting India chairman S Venkataramani.  The 50 exclusive brand outlets called ‘Experience Store’ will provide special consulting service for ‘lighting design solutions’, where Opple experts will help the consumers understand and implement the best lighting solutions for their space. Lighting is a Rs 12,000 crore market in India, growing at a pace of 17-18%, of which the LED lighting segment is growing at a rate of 41.5%, according to ELCOMA (Electric Lamp and Component Manufacturers Association of India). India, just being at the cusp of a transition from CFL to LED lighting, provides a perfect base for LED solution makers to capitalize on the opportunity, a statement from the company has said. (Source: )


Government mulls relaxation of FDI policy in medical devices sector

The government is looking at relaxing FDI policy for the cash-starved medical devices sector to attract more investments and boost domestic manufacturing. Inter-ministerial consultations are on to liberalise the foreign direct investment policy for the sector “which badly needs foreign investment”, sources said. Besides the Commerce and Industry Ministry, the Finance Ministry, the Health and Family Welfare Ministry and the Department of Pharmaceuticals are involved in the consultations. FDI in the sector is permitted through the government- approval route and the industry has been demanding that it be put under the automatic route, they said. Industry officials have maintained for long that in the current “restrictive regime” no foreign investors would invest in the sector and to make the segment modern and self- dependent, the government should relax the FDI policy. The sector currently falls under the pharmaceutical category and is accordingly subjected to FDI limits and other conditions, such as the mandatory government approvals. India allows 100% FDI in the pharma sector. While FDI is permitted through automatic route in case of greenfield investment or new venture, Foreign Investment Promotion Board (FIPB) approval is required in case of brownfield or existing companies. Besides, there are many other riders. As per estimates, India imports about 70% of its requirement of medical devices. The industry size is about $7 billion in the country. Medical devices include wide range of products such as sutures, implants and surgical instruments. After a spate of mergers and acquisition of big domestic pharma companies by multi-national firms, government tightened the FDI policy for the sector. (Source: )


To conclude, we can say that the Government of India policy regime and a healthy business environment have ensured that foreign capital keep flowing into the country. The government has taken numerous initiatives in recent years. For instance, in 2013, the Centre relaxed FDI norms in sectors such as defence, PSU oil refineries, telecom, power exchanges and stock exchanges, among others. The same year, established global players such as Tesco, Singapore Airlines and Etihad lined up to invest in India as the government opened more sectors to overseas investment. In 2013, FDI was witnessed in sectors such as automobiles, chemicals, computer software and hardware, construction development, pharmaceuticals, power, services, and telecommunications. France, Germany, Japan, Mauritius, the Netherlands, Singapore, the UK, and UAE invested in India during that year.

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